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8/8/2019 QR National DB Presentation 30 Nov 10
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Dominic D SmithSVP & Company Secretary
QR National Limited
ABN 14 146 335 622
Level 14, 305 Edward StreetBrisbane QLD 4000, Australia
GPO Box 456Brisbane QLD 4001, Australia
T +61 7 3235 9197F +61 7 3235 2188
companysecretary@qrnational.com.au
30 November 2010
Company Announcements Office
Australian Securities Exchange Limited
Riverside Centre, Level 5123 Eagle Street
BRISBANE QLD 4000
Deutsche Bank Transport Conference
I attach for release to the market a copy of QR National’s presentation to the Deutsche
Bank Transport Conference today.
Yours faithfully
8/8/2019 QR National DB Presentation 30 Nov 10
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Deutsche Bank Conference Presentation
QR National: A newly listed company
Our focus and our opportunities
Lance Hockridge
Managing Director & CEO
November 2010
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33
Australia’s largest rail freight companywith 145 years of experience
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44QR National is Australia’s largest rail freight operator
Business ProfileFY2010A
Pro forma Revenue ($bn) 2.9
Pro forma EBITDA ($m) 628
Pro forma tangibleFixed Assets ($bn)
7.9(1)
Pro forma Net assets ($bn) 6.8
Tonnes hauled 264mt
Track managed 2,300km
Employees 9,390
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55With exposure to strong demand growth in global coal markets
Note: Above data is calendar year dataSource: Australian Commodities, ABARE, March 2010
A track record of coal haulage growth
Source: Australian Commodities, ABARE, March 2010. The above data is calendar year data
Global coal import demand – 2005 to 2015
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Regulated asset base (“RAB”) of $3.6 billion as at 30 June 2010 with stable
and low risk returns
UT3 runs until 30 June 2013
Network earns a regulated WACCof 9.96%
GAPEX50 project at above regulatedreturns
Regulatory mechanisms ensure maximumallowable revenue is earned with lowvolume risk to returns
Revenue is determined by a building blockapproach on agreed volume forecasts withcustomers
Network Regulation
QR National manages unique infrastructure in Australia’slargest coal producing region
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Iron ore demand is a key driver of expected future growth
Heads of agreement with twokey customers in the Mid Westcontestable iron ore markets inWestern Australia for 14mtpa
Planned expansions of existingiron ore contracts welladvanced
New locomotives ordered
The Company is positioned to take advantage of increasingglobal demand for Australian iron ore
Iron OreGrowth opportunitiesGlobal iron ore imports
– 2005 to 2015
Source: Australian Commodities, ABARE, March 2010The above data is calendar year data
(1) Currently not contestable
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As an ASX listed company, our focus will
be on performance and deliveringshareholder value
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9Life as an ASX listed company will bring new opportunities
Removal of Government influence will help to drive improved commercialoutcomes
Greater freedom to advance our transformation program
Greater scope to pursue investment opportunities outside Queensland
More options available to us in funding our capital program
Greater scope to incentivise and reward employees for performance
Greater ability to drive real and sustainable cultural change
What willchange
9
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10…and a new focus on delivering shareholder value
A primary focus on commercial returns and not be driven by marketshare
A commercial focus on relationships with customers and improvementin operational performance
Close the performance gaps with our global peers and execute our transformation program
Maintain a focus on capital management and disciplines includingprioritisation and allocation of capital and asset utilisation
Facilitate a stable industrial relations environment
Embed the concept of growing shareholder value throughout theorganisation
Changes
andenhance-ments
10
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1111
QR National has a vision and growthstrategy which is underpinned bycommercialisation and cultural
transformation
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Capital productivity
Labour productivity
End-to-end efficiency improvements
Cost savings through improved asset management andutilisation
Retaining our leadership position and leveraging thecontinued growth in the Coal market
A strong focus on improving revenue quality
Establishing and growing substantial positions in IronOre, Bulk Commodities and Intermodal Markets
Strategically pursuing new growth opportunities
New Volume / Value through:
Market Growth
Improvements through Efficiency Programs &
Integrated Operating Model in:
Future Position
Internal Reform
Current Position
Internal Reform
Internal Reform
Source: QR National Strategy Program, 2010Note: Table not drawn to scale and is illustrative only
We will create value through both internal reform andpursuing external growth opportunities
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1313QR National has a robust strategy for growth
The right customers, marketsand assetsEstablishing solid foundations
Improve service to customers
Focus on attractive bulk rail freight markets
Pursue cross business synergies2
Coal system growthA pipeline of new opportunities
Commit to significant, commercial growthopportunities
Improve capital efficiency
Strengthen customer relationships4
Opportunities to diversify growthOptions beyond coal to further grow our business
Pursue growth opportunities in contestable iron oremarkets
Build a sustainable position in Intermodal
Strategically market services and maintenancecapabilities externally
5
A performance-based cultureDelivery focusedCommitted to people and safety
Develop strong and empowered leadership acrossthe organisation
Create a performance culture, improve commercialcapabilities and drive greater accountability
Embed a strong safety culture
1
Return over life of asset viewUsing assets to deliver value
Focus on asset utilisation, availability and costreduction
Improve returns on invested capital Improve asset utilisation and lifecycle management3
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Benchmarking has highlighted many commercialisationbenefits
Operating metric Performance category QR National Group(2) Class 1 average(1)
Revenue / NTK (A$/000 NTK) Revenue yield 45 32
Labour Costs / Revenue Cost efficiency 34% 26%
NTK/employee (MNTK) Labour productivity 7 12
Opex(3) / NTK(A$/000 NTK)
Cost efficiency 42 24
EBITDA Margin Profitability 22% 37%
Operating Ratio(4) Profitability 93% 73%
(1) Union Pacific, Canadian National, Norfolk Southern, CSX Corp, Canadian Pacific, Kansas City Southern average (12 months to 31 December 2009)(2) 12 months to 30 June 2010(3) Opex defined as operating expense including depreciation and amortisation
(4) Operating ratio defined as (1 - EBIT margin)
Source: Public Company filings
All US$ to A$ conversions shown in this table for Class 1 rail operators are based on an average A$/US$ FX rate for the period 1 July 2009 – 30 June 2010 of 0.8825(Source: IRESS closing price)
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In Coal there is a focus on continuing operational improvementand enhanced financial performance
Note: Blackwater payload excludes Minerva
A u g - 0 8
Blackwater Goonyella
T o n n e s
p e r c o n s i s t ( p a y l o a
d ) 9,500
7,500
7,000
6,500
10,000
J u l - 0 8
S e p - 0 8
O c t - 0 8
N o v - 0 8
D e c - 0 8
J a n - 0 9
F e b - 0 9
M a r - 0 9
A p r - 0 9
M a y - 0 9
J u n - 0 9
J u l - 0 9
A u g - 0 9
S e p - 0 9
O c t - 0 9
N o v - 0 9
D e c - 0 9
J a n - 1 0
F e b - 1 0
M a r - 1 0
A p r - 1 0
M a y - 1 0
J u n - 1 0
J u l - 1 0
A u g - 1 0
S e p - 1 0
O c t - 1 0
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1616Record coal volume growth in all corridors during FY10A
Record tonnes in Goonyella(2.2mt a week)
Record tonnes in Blackwater
(1.3mt a week) Record tonnes in Moura
(0.35mt a week)
Record tonnes in Newlands
(0.41mt a week)
Record tonnes in West Moreton(0.17mt a week)
Record tonnes in Hunter Valley(0.44mt a week)
Record tonnes across all systems(4.56mt a week)
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An experienced Board and ManagementTeam to lead the transformation
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Summary and Questions
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