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    QUB   AU000000QUB5

QUBE HOLDINGS LIMITED

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Chairman's Address and MD Presentation 2021 AGM

11/10/2021 | 05:57pm EST

For personal use only

11 November 2021

ASX Announcement

Chairman's Address and Managing Director's Presentation - 2021 AGM

Attached are the:

  • The Chairman's Address; and
  • Managing Director's Presentation,

in respect of the annual general meeting of Qube Holdings Limited to be held today.

Authorised for release by:

Adam Jacobs

Company Secretary, Qube Holdings Limited

Further enquiries:

Media:

Analysts/Investors:

Paul White

Paul Lewis

Director, Corporate Affairs

Chief Financial Officer

paul.white@qube.com.au

paul.lewis@qube.com.au

+61 417 224 920

+61 2 9080 1903

For personal use only

Chairman's Address

As Chairman of Qube I'm pleased to say that the company weathered the extraordinary challenges of COVID-19 safely, strongly and successfully.

This time last year we were all hoping the effects of the pandemic would pass with minimal loss of life and national economic damage. Unfortunately, the emergence of the Delta strain destroyed those hopes as the nation and the company came to grips with a more severe outbreak leading to longer and harsher lockdowns.

At Qube I believe the company's management, employees and contractors responded brilliantly to the challenges to deliver an outstanding result for the financial year 2021.

Qube responded to the global crisis with the health and safety of its people, customers and communities as the number one priority throughout the pandemic.

Quickly adapting and introducing measures to try and stop the spread of the virus and positioning the business for the subsequent economic impacts, required focused efforts with strong leadership, transparent governance controls and clear communications.

And the pandemic added more proof, if any more was needed, that the company's diversified logistics strategy will underpin long term earnings growth.

As a result the company delivered record underlying earnings with NPATA up more than 31%. The Board was able to increase dividends by more than 15% to 6 cents per share fully franked.

The key drivers of the earnings growth were the Operating Division and Patrick, and the result also benefitted from a lower net interest expense.

The Operating Division experienced high volumes across most parts of the business with container, forestry and bulk activities particularly strong, and the result also benefitted from growth capex undertaken in the current and prior period.

Patrick benefitted from high market volumes and increased landside and ancillary charges, although was adversely impacted by industrial action in the period.

Health and Safety

Qube continued its strong focus on safety and zero harm with a particular emphasis in FY21 on increasing reporting, corrective action closures, incident closure rates and leadership inspections. The result was an improvement in lost time injuries, however further focus needs to be placed on reducing the number of total injuries.

In FY21, Qube improved its sustainability performance, including achieving the following outcomes:

  • Consistent with the goal of Zero Harm, Qube's zero fatality objective was achieved in
    FY21 and, a further reduction in the lost time injury frequency rate (LTIFR) from 0.9 to 0.8 per million hours worked.
  • Net emissions were steady compared to FY20 while underlying revenue increased, resulting in Qube's carbon intensity (tCO2 per $M) further decreasing by around 8.6%.
  • Qube continued to implement its Modern Slavery governance framework and action plan including developing a Supplier Code of Conduct and questionnaire, complemented by an internal Modern Slavery training package for managers, supervisors and procurement teams.

For personal use only

  • KPMG was engaged to investigate the options available for achieving a Low Carbon Future. Following on from the findings from the KPMG report, Qube will investigate the options to understand and define the financial and operational implications. Understanding these impacts will enable Qube to adopt a longer-term carbon goal and a sustainable strategy to address a Low Carbon Future ensuring that targets set will be achievable.
  • We increased our focus on improving sustainability reporting systems, in particular data
    collection and verification processes across the business. This supports reporting against our Sustainable Development Goals (SDGs).

Operating Division

The Operating Division reported underlying revenue growth of around 12.5% to $2.0 billion and underlying earnings growth (EBITA) of 29.5% to around $212.0 million.

Qube remained highly diversified by customer, product, service and geography. In FY21, the top 10 customers across the division represented approximately 19% of its total revenue and included mining companies, energy companies, shipping lines, retailers and manufacturers. No single customer represented more than 2.5% of the total divisional revenue.

The majority of the earnings growth in the Operating Division was attributable to Logistics activities which benefited from a much larger contribution from grain-related activities comprising bulk and containerised haulage, grain storage and loading (benefitting from the Quattro acquisition in the prior year as well as a stronger grain harvest generally) and container volumes across Australia including new contract wins.

General stevedoring activities across a majority of Qube's Australian (predominantly east coast) port operations were strong with higher bulk and break-bulk (mainly steel imports and grain exports) than the previous year. The rebound of motor vehicles imports trending back to pre COVID-19 levels in the second half of the year assisted the improvement in the general stevedoring operation compared to the prior year.

Patrick Terminals

Patrick again delivered a strong contribution to the Qube full-year result. Patrick continued to generate strong cash flow in the period, with total distributions to Qube in the period of $120 million compared to $20 million in FY20.

The underlying contribution from Qube's 50% interest in Patrick was $41.3 million NPAT and $50.8 million NPATA, an increase of 58.8% and 47.2% respectively, over the prior corresponding period. This contribution is inclusive of Qube's share of interest income ($14.9 million post-tax) on the shareholder loans provided to Patrick.

The FY21 results benefited from high market growth (lifts) of around 8.8% with Patrick's volumes (lifts) increasing by around 3.3%. During the period, Patrick secured several new services and also extended a number of its existing contracts.

Moorebank Logistics Park (MLP) Monetisation Process

I'm pleased to provide an update on the Moorebank monetisation process.

Through FY21, Qube continued to progress the monetisation process with the LOGOS consortium. On 25 February 2021, Qube entered into a non-binding commercial term sheet with LOGOS for the sale of 100% of Qube's interest in the warehousing and property components of the MLP project.

For personal use only

In July 2021, the company announced binding terms for the sale had been agreed and completion was expected in the fourth quarter of calendar 2021.

Commercial agreement on key transaction documents has now been reached between

Qube and LOGOS.

Transaction completion is subject to a number of conditions including Moorebank Intermodal Company consent following Commonwealth and FIRB approvals. As at today's date, we expect completion to occur prior to Christmas, in line with our original forecast.

On completion, LOGOS will acquire 100% of Qube's freehold land in MLP, 100% of Warehouse Trust (the leasehold interest in MLP warehouses) and Qube's 34% interest in Land Trust (the leasehold interest in MLP land). Qube will retain ownership of the intermodal rail terminals.

The transaction is expected to deliver Qube total consideration of around $1.67 billion before tax, transaction costs and other adjustments. Approximately $1.36 billion is payable on financial close and around $312 million is deferred, subject to a number of completion adjustments.

Summary and Outlook

On the basis the Moorebank monetisation process completes as expected, Qube will be in an even stronger financial and operating position to generate meaningful cash flow and earnings growth.

Qube will emerge with a more predictable earnings profile from its strategic and highly diversified logistics operations.

In FY22, overall growth is expected in underlying revenue and earnings reflecting a full period contribution from the FY21 acquisitions, growth capex and new contracts, partial period contribution from the FY22 growth capex, an initial contribution from the BlueScope contract from the second half of FY22 and organic growth across certain markets.

Finally, on behalf of the Board, I would like to thank all employees for the part they have played in Qube's performance in FY21 and, in particular, to pay tribute to our former managing director Maurice James who stood down as Managing Director on 1 July 2021. Clearly Maurice's success steering the business since its inception has led to Qube's success over the last decade and in turn our shareholders' success.

Allan Davies

Chairman, Qube Holdings Limited

11 November 2021

nal use only

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Qube Holdings Limited published this content on 10 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 November 2021 22:56:12 UTC.


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Sales 2022 2 229 M 1 601 M 1 601 M
Net income 2022 163 M 117 M 117 M
Net Debt 2022 1 010 M 725 M 725 M
P/E ratio 2022 34,6x
Yield 2022 2,32%
Capitalization 5 702 M 4 096 M 4 095 M
EV / Sales 2022 3,01x
EV / Sales 2023 2,77x
Nbr of Employees 6 500
Free-Float 95,1%
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Mean consensus OUTPERFORM
Number of Analysts 14
Last Close Price 2,97 AUD
Average target price 3,43 AUD
Spread / Average Target 15,4%
EPS Revisions
Managers and Directors
Paul Joseph Digney Managing Director & Director
Paul Lewis Chief Financial Officer
Allan Davies Non-Executive Chairman
Sam Kaplan Deputy Chairman
Ross Andrew Burney Non-Executive Director