Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — Debt Investor Presentation (August 2015)
34 slides from Aurizon's debt investor presentation, August 2015
Slide 1: Debt Investor Update
Debt Investor Update Arlette Griffiths–Smith – Acting Group Treasurer Pam Bains – VP Network Finance Further information can be found on the Aurizon Debt Investor Website : August 2015 http://www.aurizon.com.au/Investors-site/Pages/Debt-Investors.aspx
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: Agenda
Agenda 1 Aurizon FY15 in review 4 2 Aurizon Network 7 3 Capital management 10 4 Regulatory Update 12 5 Financial performance and capital projects 15 6 Appendix - Experienced Board and Management 23 7 Appendix - Aurizon Holdings FY15 results analysis 26 3 3
Slide 4: 1. Aurizon FY15 in review
1. Aurizon FY15 in review & 2 AURIZON.
Slide 5: Key headlines – FY2015
Key headlines – FY2015 Safety › 43% improvement in LTIFR, 14% improvement in TRIFR Results › Revenue flat at $3.78bn › Underlying EBIT up 14% to $970m › Statutory NPAT up 139% to $604m (impact of VRP and impairment of $386m in FY2014) › ROIC up 0.9ppt to 9.7%, statutory EPS up 141% at 28.4cps Operat
Slide 6: Key financial and operational highlights
Key financial and operational highlights $m FY2015 FY2014 Variance Continued profit growth despite flat volumes Revenue 3,780 3,822 (1%) › Flat above rail volumes, lower pass through fuel revenue › Strong Network performance with uncapped revenue and record EBIT (underlying) 970 851 14% tonnage meet
Slide 7: 2. Aurizon Network
2. Aurizon Network & 2 AURIZON.
Slide 8: About Aurizon Network
About Aurizon Network Aurizon Network controls, manages, operates and maintains the Aurizon Holdings legal structure • fixed rail infrastructure "below rail" assets of the Central Queensland Coal Network (CQCN) – Regulated Asset Base (RAB) of A$4.5 billion(1) Aurizon Market cap of A$11bn(3) – Rate
Slide 9: About the CQCN
About the CQCN The CQCN comprises 4 major coal systems and 1 connecting system link serving Queensland’s Bowen Basin coal region: CQCN system overview Newlands, Goonyella, Blackwater and Moura with GAPE the connecting system link – 2,670 kilometres network length – Over 40 operating coal mines ser
Slide 10: 3. Capital management
3. Capital management & 2 AURIZON.
Slide 11: Strong financial position and ratings stability
Strong financial position and ratings stability • Overview of Aurizon Network • Debt maturity profile (as at 30 June 2015) Aurizon Network operates as a separate standalone entity to Aurizon Network is committed to prudent capital management through Aurizon Operations and Aurizon Holdings the di
Slide 12: 4. Regulatory Update
4. Regulatory Update & 2 AURIZON.
Slide 13: Aurizon Network’s 2014 Draft Access Undertaking (UT4) Status
Aurizon Network’s 2014 Draft Access Undertaking (“UT4”) Status The Queensland Competition Authority (“QCA”) published its Draft Decision on Aurizon Network’s UT4 Maximum Allowable Revenue (“MAR”) for the period of the next undertaking on 30 September 2014 – The decision details an unsmoothed MAR o
Slide 14: Growth in Aurizon Network's RAB
Growth in Aurizon Network's RAB • Aurizon Network’s RAB over time QCA determines Aurizon Network's access pricing (A$bn) based on the estimated value of the RAB +45% Growth in RAB RAB value of A$4.5bn (excluding assets subject to driven by commissioning access facilitation deeds) as at June 30,
Slide 15: 5. Financial performance and capital projects
5. Financial performance and capital projects 15
Slide 16: Network performance and operating metrics
Network performance and operating metrics FY2015 FY2015 FY2015 v FY2014 $m FY2014 2H 1H Revenue - Access 1,048 547 501 951 10% Revenue recognised for FY15 - Services 13 7 6 17 (24%) on the basis of transitional tariffs and actual tonnages. The - Other 47 24 23 44 7% MAR for FY14 was capped with $7
Slide 17: Central QLD Coal Network volumes (mt)
Central QLD Coal Network volumes (mt) FY2015 FY2015 v FY2015 FY2014 2H 1H FY2014 Newlands 14.7 6.7 8.0 12.0 23% Goonyella 119.6 59.5 60.1 114.5 4% Blackwater 63.7 31.2 32.5 63.1 1% Moura 12.3 5.8 6.5 12.4 (1%) GAPE 15.4 7.8 7.6 12.5 23% Total 225.7 110.9 114.7 214.5 5% Average haul length3 (kms) 249
Slide 18: Capitalisation and credit metrics
Capitalisation and credit metrics Strong balance sheet with a commitment to maintaining a strong investment grade credit rating Credit metrics do not reflect the benefit of higher revenues from increased throughput due to the impact of transitional tariffs Capitalisation (A$m) Jun-13 Dec-13 Jun-14
Slide 19: 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 Spend to 30 June 2015: $725m of $831m ex
Slide 20: Questions & Answers
Questions & Answers
Slide 21: Appendix
Appendix
Slide 22: 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 Free cash
Slide 23: 6. Experienced Board and Management teams
6. Experienced Board and Management teams 23
Slide 24: Experienced Board and Management teams
Experienced Board and Management teams Board John Atkin Alex Kummant John Cooper Non-Executive Chairman Director, Non-Executive Director Executive Vice President Mr. Atkin has more than 30 years’ experience in financial Mr. Kummant has more than 25 years’ experience in the North Mr. Cooper has more
Slide 25: Experienced Board and Management teams
Experienced Board and Management teams Aurizon Network management Clay McDonald Simon Smart Vice President, Network Operations Vice President, Commercial Development Mr. McDonald has 15 years’ experience in the transport and logistics sector Mr. Smart has over 35 years’ of operations, supply chain m
Slide 26: 7. Aurizon Holdings – FY15 results analysis
7. Aurizon Holdings – FY15 results analysis 26
Slide 27: FY2015 vs FY2014 underlying EBIT bridge
FY2015 vs FY2014 underlying EBIT bridge Volume growth: Includes: Transformation benefits: › Iron Ore – ($33m) › Depreciation – ($20m) › Operations – $99m › Bulk – ($5m) › Cost escalation – ($15m) › Support – $24m › Intermodal – $10m › Labour escalation – ($14m) › Cost of transformation – ($20m) › Co
Slide 28: Underlying EBIT by function
Underlying EBIT by function FY2015 $m FY2015 FY2014 Variance 2H 1H Key drivers of Group performance: Network 484 266 218 412 17% › Network revenue uncapped, based on transitional tariffs and actual volumes › Flat above rail volumes with marginal Commercial & coal growth offset by lower freight and 3
Slide 29: Key FY2015 drivers
Key FY2015 drivers Network Commercial & Marketing Operations Other › Underlying EBIT up $72m › Underlying EBIT down $55m › Underlying EBIT up $72m › Underlying EBIT up $30m (+17%) (-2%) (+3%) (+31%) › Revenue increased $96m or › Freight revenue (-$110m) – › Revenue decreased $4m with › Revenue incre
Slide 30: Cash flow summary
Cash flow summary $m FY2015 FY2014 EBITDA - statutory 1,489 964 › FY2014 impacted by non-cash impairments, FY2015 underlying EBITDA increased 10% Working capital & other movements 7 342 Cash from operations 1,496 1,306 Interest received 9 9 › Net cash received due to tax effect of FY2014 Income taxe
Slide 31: Capex update
Capex update Capital expenditure FY2015 – FY2017 ($m)1 › Capex spend for FY2015 in line with forecast at $1.1bn › Forecast for FY2016 and FY2017 remains at $1.45bn, with 555 1,107 marginal change in categories reflecting development of IOP and fleet planning 272 ~$1,100m › Growth spend deferred in l
Slide 32: Balance sheet summary
Balance sheet summary As at ($m) 30 June 2015 30 June 2014 › High FY2014 cash on hand balance to fund Total current assets 934 1,314 purchase of Aquila in July 2014 Property, plant & equipment 9,900 9,441 › Capex spend on WIRP, Hexham, Rolleston Other non-current assets 502 193 › Investment in Aquil
Slide 33: Debt summary
Debt summary Aurizon Group maturity profile as at 30 June 2015 › Strong cashflow resulted in repayment of Group level $m revolving debt facilities, with all long term debt currently 0 0 held in Aurizon Network Drawn Debt Undrawn Debt › Debt maturity profile average tenor increased to 4.3 years (FY20
Slide 34: Other key matters
Other key matters Queensland Enterprise Agreements (EA) update › Significant achievement in restructuring EAs after more than two years of protracted negotiations › Fair Work Commission (FWC) made an order to terminate remaining legacy Queensland EAs on 22 April 2015. Subsequently, bargaining re-com
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