Good afternoon, ladies and gentlemen. I'm Tim Longstaff, Aurizon's Chairman. On behalf of the board, welcome to our 2026 annual general meeting. Can I thank the shareholders from Brisbane here in the room who've braved the storm and pestilence to be here? It's very kind of you to join us. I would like now to introduce James Glover, an Aurizon employee from Rockhampton, who will provide the acknowledgment of country. James.
Good afternoon, everyone. Before we begin, I would like to acknowledge the traditional custodians of the land on which we meet today, the Turrbal and Jagera peoples. I pay my respects to elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander peoples here today. I acknowledge the continuing connection to First Nations people, what they have to country, culture, community, and heritage. The land and waterways that surround us hold deep cultural, spiritual, and environmental significance. They have sustained Aboriginal and Torres Strait Islander peoples for thousands of generations. As an organization, Aurizon operates across many different regions with our railways, infrastructure, and operations traveling through and alongside important lands and waterways. It is important that we recognize the responsibility that we have to respect, protect, and take care of the country as we carry out our work.
I would also like to acknowledge my own connection to country. I'm a proud Darumbal man, and I'm proud of my heritage, culture, and connection that I have to my people and country. As we move people and resources across this country, let us continue to respect the land, the waterways, and the communities that make up the country we work on. Thank you.
Excellent. We now have Nicole from Karstens, who's going to conduct a short briefing to explain the emergency and safety procedures for the room. Nicole.
Hi, everyone. I'm Nicole from Karstens, operations manager for Brisbane. Just a bit of housekeeping to get us started. As you made it into the room, you'll notice male bathrooms right outside the room, female on the opposite side. Your lounge area, shared area, just head outside the room straight ahead. Afternoon tea will be served at 3:30, so that'll be in your lounge area. And full access to two coffee machines right outside the room and directly opposite on the other side. Moving into our fire evacuation, we operate on a two-alarm system. First alarm, await further direction. Second alarm, evacuation. Unfortunately, we are located on level 24, so that is 24 flights of stairs. So make your way down, orderly fashion, and then we will be meeting across the road, Adelaide Street, Anzac Square.
Any other questions or concerns, please come see me, I'll be at the front desk. Thank you.
Thank you, Nicole. We'll now move to the agenda. The notice of meeting has been provided to all shareholders and published on the company's website. It sets out the items of business and resolutions that will be put to the meeting today. The agenda for today's meeting is on the screen now. Addresses will be given by myself, the managing director and CEO, Andrew Harding, and the directors standing for both election and re-election. We'll then move to the business of the meeting. We will take questions at one time on all agenda items before moving to voting on the resolutions. I would now like to introduce your board of directors. They're joining me in the room today, and as I read out their names, they will put up their hand. First, we have Andrew Harding, our managing director and Chief Executive Officer.
Marcelo Bastos, Sarah Ryan, Lyell Strambi, Samantha Tough, Amanda McMillan, and Andrew Adam. To my right here at the table is our Company Secretary, David Wenck, and our Head of Investor Relations and moderator of questions, James Coe. Members of the company's executive team are also in attendance. Matthew Donaldson and Alison White of Deloitte Touche Tohmatsu, the company's external auditor, are in attendance today and will be able to answer questions regarding the audit of the company's financial report. I'll now turn to my meeting address. It's a great honor to address my first annual general meeting as your Chairman. I've been in the role of Chairman for nine months, but I've been on your board now for around three years. In that time, I've visited operations in every state and territory in which Aurizon operates, engaging with customers and our people in remote and regional locations.
I've had the privilege to watch Aurizon grow and consolidate into its position as one of Australia's pre-eminent transport companies. In this past year, that growth has been reflected in strong operating and financial performance. Andrew will cover this in more detail, but I want to acknowledge firstly, underlying earnings before interest, tax, depreciation, and amortization, or EBITDA, growing 9%, earnings per share up 29%, and dividends up over 45% at AUD 0.23 per share. This is a strong result for shareholders. Higher earnings and a materially higher dividend, supported by strong cash generation and disciplined capital management program. Today, I would like to discuss three broader themes that are tied to our future growth and the contribution we can make to the economic success of Australia. Firstly, turning to our aspiration.
We have a team of more than 6,000 employees, a fleet of more than 700 locomotives, 15,000 wagons, and more than 5,000 km of rail infrastructure. Each year, we transport hundreds of millions of tons of bulk commodities and containerized freight, connecting our customers, miners, primary producers, and industry with domestic and international markets. While the figures are impressive, they don't show what lies beneath the surface in terms of who we are and what we want to be, a company driven by values and where people know safe and choose safe. Recognized for disciplined growth, consistent performance, reliable earnings, and strong dividends. The first choice for our customers' transport solutions. Acknowledged as a good employer, a valued member of the community, and a key enabler of Australia's export prosperity.
We already have many of these fundamentals in place, but we also know that there's more work to do to maintain and enhance this position. I want to turn now to how we deliver. Our values of safety, people, integrity, customer, and excellence underlie everything, what we do and how we do it. Safety remains our top priority. Our efforts to support a goal of protecting ourselves, each other, and the communities in which we operate. We do this through implementing systems and processes, understanding and controlling safety hazards, and engaging to ensure frontline safety discipline. Discipline is also key, the key to our operating and financial success.
For example, management of capital that strikes a balance between maintaining a healthy credit rating, and our credit rating is investment grade, reinvesting back into the business and returning capital to shareholders while also allowing flexibility to invest in growth options prudently. We can see this in the past year through the strong returns to shareholders via buybacks and dividends. Indeed, our capital allocation framework has delivered over the last four years, AUD 1.8 billion, or around 25% of our market capitalization back to you, our shareholders. We can also see it through our BHP Copper contract in South Australia, one of the largest road-to-rail conversions ever in Australia. Such a landmark contract could only be won because of our long-sighted acquisition of the Tarcoola to Darwin rail line and the subsequent Berth 29 acquisition in Adelaide, plus our willingness and ability to invest, including a new terminal in Pimba.
This is smart reinvestment of capital back into the business to support organic growth. Similarly, the recently announced expansion of our containerized freight offering to support motor vehicle distribution also builds on this investment and capitalizes on our national footprint of track infrastructure, rolling stock, and terminals. This service offering is underpinned by new contracts with global suppliers, NYK and CEVA Logistics, that will see tens of thousands of cars delivered via cross-country rail for sale in metropolitan and regional Australia. These are all organic opportunities well-aligned to what we already do within a framework that also allows for future shareholder value creation through acquisitions or joint ventures if they make sense and deliver value for money.
Underpinned by an objective of growing the business and optimizing value to you, our shareholders, and ultimately as your board and management team and our employees nationwide that drive this operating and financial discipline. They also ensure that we continue to put our customers first and at the heart of everything we do, working hard every day to make sure they are responsive and deliver safely and reliably. Using capability and innovation to constantly strive for greater efficiency and continuous improvement, all with the aim of working to ensure we can be our customers' first choice when it comes to transport solutions, and because ultimately, we know that their success, our customers' success, is our success.
That is why we continue to invest in the people that deliver, our employees, with an employee value proposition providing competitive benefits, learning and career opportunities, and a team culture that is inclusive and innovative. I am especially proud of the opportunities we provide to the 7% of our employees who are Indigenous, well above the national average, and the 23% of our people who are women, with more to do on both fronts. Another key pillar of our employee value proposition, developed by our employees and for our employees, is the impact we can make on Australian communities. Around 85% of our workforce are based in rural and regional Australia. And we support our people where they live and work through employment, procurement, and investment. We help sustain the vibrancy and social fabric of these communities.
In the past year alone, we have supported 45 different community projects through the Aurizon Community Giving Fund. These funds were spent on initiatives such as literacy kits to support children in crisis accommodation, specialized blood warming medical equipment, and community-based first aid training. Finally, we respect our people and communities through strong environmental and cultural heritage compliance and initiatives to reduce our carbon emissions, as were detailed in our sustainability report. By delivering on these building blocks, we can ensure that Aurizon continues to perform well, remains an active, valued member of our communities, and continues to be disciplined in directing our capital and capability into opportunities that deliver the greatest value to our customers and shareholders. Turning now to our contribution to the Australian economy. I am proud not only of what our company does, but also the significant contribution we make to the Australian economy.
We are leveraged to growing global demand for Australian bulk commodities driven by domestic growth, infrastructure development, energy generation and storage, as well as food consumption. We are the largest transporter of coal and non-Pilbara iron ore in Australia, as well as grain, copper, nickel, bauxite, and rare earths. As the economy grows, so does the demand for our containerized freight business, with everything from supermarket goods and consumer products to industrial imports moving on our trains. We are privileged to hold this unique position in the center of the supply chain that delivers within Australia and to the world. So turning finally to an outlook and a conclusion. As you would have seen, we have great aspirations for Aurizon in what we do and how we do it. I do not, however, want to underestimate some of the headwinds we face. For example, cost inflation is real.
Geopolitical troubles continue to challenge global fuel prices, and difficulties in our customers getting major projects approved has delayed some of our growth initiatives. We have, though, the people and plans to navigate these challenges, and I would like to thank Andrew and his executive team, who are with us today, and our broader workforce for their commitment and hard work.
In closing, I would also like to recognize the significant contribution of my predecessor, Tim Poole, and thank him for his leadership and commitment to the business over more than 10 years. I would also like to welcome two new appointments to the board, former infrastructure and financial executive, Amanda McMillan, OBE, who joined us in January, and former rail and port executive, Andrew Adam, who joined us in July. They are already proving to be impactful contributors, and you will hear from them later in respect of their re-election.
Most importantly, though, I would like to acknowledge you, our shareholders, for your continued support. Thank you for that, and I will now pass over to Andrew.
Thank you, Tim. Good afternoon, ladies and gentlemen. This has been a year of strong delivery for Aurizon. We have strengthened the performance of the business, progressed key strategic priorities, and continued to position the company for long-term value creation in the freight and logistics markets that are critical to Australia's economy. Our focus has remained clear: to operate safely, serve our customers well, invest with discipline, and build a more resilient, diversified, and competitive Aurizon. The results we delivered in the financial year reflect the capability of our people, the strength of our assets, and the progress we are making in executing that strategy. Today, I will take you through our safety performance, our financial and operational results, and the progress we are making across our business units and growth initiatives.
Most importantly, I will outline how these elements come together to support our ambition to deliver sustainable returns for shareholders, while helping transport the goods, commodities, and products that keep Australia moving. I want to begin, as we always should, with safety. As Tim indicated, protecting our people and the communities in which we operate remains our most important responsibility. We are committed to continuous improvement and remain focused on critical controls, leadership visibility, and promoting a culture where safety is everyone's responsibility. Last financial year, it was pleasing to see a continued reduction in our serious injury and fatality frequency rate. These are incidents that don't occur often, but when they do, they can have high consequence. Our total recordable injury rate increased, but pleasingly was lower in the second half compared to the first half of the year.
In addition to operational safety performance, we continued to invest in our level crossing education and awareness campaign. This year, we launched a new animated approach, reinforcing with road users the need to always be safe when they approach a level crossing and to respect the sign every time. It builds on the success of our existing campaign, taking a fresh creative approach to ensure people stay engaged with the importance of this safety message. The campaign focuses on people's everyday choices and the consequences of fleeting moments of distraction. It connects the brief inconvenience of stopping at a level crossing with the moments that matter most, reinforcing that what's ahead is worth the wait.
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Turning from safety to overall performance, the financial year also demonstrated the strength and the resilience of the Aurizon business. This year, we delivered strong financial outcomes with positive contributions from all of our business units, resulting in improved earnings and shareholder returns, as well as continued progress against our strategic objectives. In summary, underlying earnings before interest, tax, depreciation, and amortization was up 9% to AUD 1.724 billion on the back of higher volumes in bulk, containerized freight, and network, and flat volumes in coal. Underlying NPAT was up 24% to AUD 433 million. Full-year dividends for shareholders were up over 45% to AUD 0.23 per share. Let me now turn to the business units in more detail, starting with coal. Coal delivered another solid result underpinned by operational discipline, strong asset utilization, and productivity improvements, contributing significantly to our overall group earnings and cash flow.
We made considerable progress on recontracting a number of our coal customers with more than a quarter of the portfolio recontracted since July 2025, pushing out the length of these contracts to the mid to late 2030s. This includes major Central Queensland customers, BMA and Whitehaven. The new BMA contract represents 100% of the tons tendered for recontracting and services their five coking coal mines in the Bowen Basin for up to 12 years. While Whitehaven is a new 10-year contract for the haulage of coal from their Central Queensland mines of Blackwater and Daunia. Alongside coal, our network business remains central to the reliability and long-term value of our integrated model and continued to perform strongly. Importantly, we also made good progress with UT5+.
This is the latest undertaking for the Central Queensland coal network, and getting it in place will provide the certainty of an access and pricing framework for 10 years. With support from the majority of our customers, we submitted a draft to the Queensland Competition Authority in December, and in June, the QCA published a draft decision supporting all the key elements. Earlier in the year, we also completed the CQCN network ownership structure review. The review, supported by external advisors, assessed a broad range of whole-of-business and minority structure options. We determined that retaining 100% ownership of network, Aurizon's above-and-below rail-integrated model, remained the option that best delivers long-term value for our shareholders. Beyond our established coal and network businesses, Bulk continues to be an important source of growth and diversification. Bulk achieved a record result and continues to be a significant growth opportunity for Aurizon.
Revenue was driven by growth in base metals, grain, and West Australian iron ore. We undertook first haulage of iron ore for Yilgarn Iron in Western Australia and AG River Energy in the Northern Territory. As Tim Longstaff mentioned, we also commenced haulage for BHP Copper in South Australia. This contract shifts copper concentrate and cathode from road to rail between Pimba and Port Adelaide, replacing an estimated 13 million kilometers of truck movements annually. This will deliver enormous benefits in helping reduce emissions, congestion on roads, and safety risks for motorists. It also illustrates the role that Aurizon and rail can play in enabling low-carbon transport solutions and supporting Australia in the transition to a more sustainable economy. The same theme of disciplined growth is also evident in containerized freight, where we are building scale in a market with significant long-term potential.
As a result of continued customer growth, we expect our containerized freight business to achieve EBITDA breakeven this financial year after only standing up the new business a few years ago. We have a long-term cornerstone contract with TGE, formerly Toll Global Express, one of Australia's largest freight and logistics companies, providing containerized freight rail line haul services connecting the state capitals of Perth, Adelaide, Melbourne, Sydney, and Brisbane.
We have also seen strong growth through our customers of more than 175% in the past financial year. Sorry, strong growth through other customers of more than 175% in the last financial year. Late last month, both Tim and I attended the opening of our new AUD 60 million Kewdale terminal in Perth. This new terminal is designed to accommodate full-length, double-stacked interstate freight trains of up to 1.8 km in length, providing us with the scale to support growing customer demand.
Our existing Perth terminal at Forrestfield will be repurposed to support rail services for our national motor vehicle distribution network. As well as utilizing our extensive freight network across Australia, our expansion into the car distribution market also advances our ambition to establish a rail-based land bridge linking Asia through the Port of Darwin to the southern and eastern markets. We see the potential for our containerized freight business and landbridging to reshape how freight moves across Australia, both through imports and domestic movements. As motor vehicle volumes build, we will introduce innovative, purpose-built auto wagons to support the next phase with the fleet currently in production. These types of wagons have never been used in Australia before and will enable more efficient, high-capacity movement of vehicles across long distances.
We first outlined our landbridging ambitions after we acquired the Darwin to Tarcoola Railway in 2022, identifying the opportunity to connect shorter shipping routes in Darwin with efficient inland rail transport. With vehicle movements already underway and customer demand building, it is exciting to see the landbridging model now moving from concept to delivery. These results give us confidence, but they have also been delivered in an operating environment that continues to present challenges as well as opportunities. More broadly, we delivered this result in a complex operating environment with geopolitical uncertainty, fuel volatility, shifting commodity markets, and inflationary pressures continuing to test supply chains and cost bases. Our response remains disciplined and consistent: manage the controllables, stay close to customers, and continue to deliver safe, reliable, and competitive services. At the same time, the transition to lower carbon supply chains represents a real opportunity for Aurizon.
Rail already offers significant environmental advantages over road, and we will continue to work with customers and governments to improve fleet efficiency, reduce their operational emissions, and support practical decarbonization across Australia's freight task. We are proud of the role Aurizon plays in moving the goods, commodities, and products that support our customers, regional communities, and the broader Australian economy. With our national footprint, strategic infrastructure, and experienced workforce, we are well-placed to manage challenges, capture opportunities, and continue building a stronger Aurizon. Bringing all this together, let me close with our outlook and acknowledgments. As we look ahead, Aurizon is well-positioned, with momentum across the business, a clear strategy, and disciplined plans to keep delivering value for shareholders.
We reaffirm the guidance provided in August, with group underlying EBITDA expected to be in the range of AUD 1.725 billion- AUD 1.775 billion, and a full-year dividend of AUD 0.23- AUD 0.24 per share. Our priorities remain clear: operate safely, optimize coal and network, grow bulk, and build a competitive national containerized freight market. I sincerely thank our people across Aurizon for their commitment and professionalism. Their work underpins our results and our confidence in the opportunities ahead. For shareholders, our commitment is clear. Disciplined execution, disciplined investment, and a stronger, more diversified Aurizon that can deliver sustainable value over the long term. Thank you for your continued support, and I will now pass back to Tim.
Thank you, Andrew. We now come to the formal business of the meeting. There are two Directors seeking election today, Amanda McMillan and Andrew Adam. There are two Directors standing for re-election today, Samantha Tough and myself. I am delighted to hand over now to Amanda, who will say a few words, followed by Andrew, and then Samantha, and I will finish at the end.
Good afternoon, and thank you, Tim. I am delighted to have joined the Aurizon team in January this year and to be standing now for my first Director election. Since joining, I have spent time with the management team, I have heard from some of our key customers, and I have been in the field with our frontline teams. I have been struck by the quality of the people I met, their passion for the business, the commercial partnerships they have developed with customers, and their commitment to performance improvement and growth to drive shareholder returns, balanced always with huge regard for the communities that surround and support the business. There is much still to do. Challenge sits alongside the many opportunities. But 10 months in, I am more excited than ever to play my part.
Much of my career has been spent in aviation and regulated infrastructure, sectors that, like rail, are capital-intensive, tightly regulated, and depend on getting operational and safety performance right every single day. As a finance professional, commerciality has been front and center throughout my career, seeking to grow responsibly, deliver for customers, and ultimately build a business shareholders can be proud of. As a former CEO, I have deep hands-on experience and a track record of delivering strategic change, commercial success, and operational excellence, often under intense public and regulatory scrutiny. Together with my investment management and board experience at Macquarie Asset Management, I hope to bring insight and challenge to all that I do at Aurizon.
At Tim's request, I have joined the Safety, Health, and Environment Committee and the Audit, Governance, and Risk Management Committee, areas I have a deep interest in and a commitment to lifelong learning. I look forward to working with Sarah and Marcelo, the chairs of those committees. Aurizon is balancing strong performance in its core coal and rail freight business today against the infrastructure, investment, and diversification needed for the future, and that's precisely the balance I've spent my career working on. I'm fully committed to this board, and I'm able to give Aurizon the time the role deserves. As a fellow shareholder and a proud adopted Australian, I would be delighted to have your support today for my election as a Director. Thank you. I'll now hand over to Andrew Adam.
Good afternoon, everyone, and thank you, Chairman, and thank you, Amanda. I was delighted earlier this year when asked to join the board of Aurizon. My career commenced in the coal industry, where I spent over a decade in executive management, including industrial relations. For the past 27 years, my executive leadership experience within Australia and overseas has focused on end-to-end supply chain management.
including ocean container terminals, bulk ports, intermodal rail terminals, containerized and bulk rail freight, road transport, and freight forwarding. I was CEO of DP World Australia for three years. It was one of Australia's largest container terminal operators and supply chain businesses, with terminals in Brisbane, Sydney, Melbourne, and Fremantle, handling approximately 40% of Australia's container trade. I was also President Freight for Pacific National for six years, which also managed the intermodal business for Pacific National. It also gave me a practical understanding of the Australian rail freight industry, and also Aurizon. I'm currently a Non-Executive Director of NSW Ports, which owns Port Botany and also Port Kembla, and I'm also independent chair of Auris Rail. In addition to my executive experience, I'm a graduate of the Australian Institute of Company Directors, and I hold a Bachelor of Economics at the University of Newcastle.
As Amanda pointed out, it's exciting times within Aurizon, and Aurizon has many fantastic and important transformation activities that are important for the business today and also its future. Given my experience, I'm well-placed to contribute to the company's strategic direction. I can also confirm that I have the necessary time to devote to this role, which includes being a member of the Safety, Health, and Environment Committee, as well as the Audit and Risk Committee. In that time since I joined the board in July, I've met with the management team and visited some of the impressive operations in South Australia. These meetings and visits are important to gaining valuable insights into the achievements of, and the challenges faced by, the business, and I look forward to continuing with them.
I thank my fellow Directors for recommending me for appointment and would be grateful if shareholders support my election today. I will now hand over to Samantha Tough.
Thank you, Andrew. It's a good change of baton, isn't it? I believe I'm the third and the second last one in this series. But good afternoon, and thank you for considering my re-election to the Board of Aurizon. To date, I've been with the Aurizon Board for three years, and as part of those responsibilities, I also chair the People and Remuneration Committee, a role I have held for over 10 years in a range of organizations. In that committee, we oversee the important workforce strategies and the increased focus we're finding on the complex industrial landscape. I'm also a member of the Aurizon Network Board, and with all of that and in that time, I remain committed to and captured by the quality of the people in Aurizon and the value of the business.
With Western Australia being an important strategic opportunity for Aurizon's growth, I'm pleased to be based in Western Australia and have long-standing relationships, due to my own professional career, with some of our key industry players and the state government. As you heard from Andrew and from Tim, we recently opened the AUD 60 million state-of-the-art freight terminal in Kewdale. We have the Forrestfield logistics site supporting our national motor vehicle distribution network, and we also have the partnership with Alcoa, which will trial the Battery Electric Tender hybrid locomotive. I generally have a background in a range of sectors. They include energy, resources, infrastructure, agriculture, and logistics, and they include Woodside, Synergy, CBH, and various engineering companies. I currently chair an energy utility in Western Australia called Horizon Power, which provides energy to over 120 sites in regional Western Australia.
And Horizon and Aurizon, aside from having a phonetically challenging name, also share an important objective, though, of contributing to regional Australia and operating a business in a regulated environment. They share challenges of retaining and managing the safety of a regional workforce in the regions, and they also share the challenge of contracting and supporting local procurement practices in the regions. Doing these things well is rewarding for regional Australia, but also for the prosperity of Aurizon, where 85% of our workforce are in the regions. The transport sector, as many of you know, I'm sure, is an important sector for Australia, contributing over 8%. That would be significant. Sorry, 8% of GDP.
The transport sector is also a strategic priority for another organization I am involved with called the Clean Energy Finance Corporation, or the CEFC, and that is Australia's AUD 35 billion green bank, in which I have been involved with for nine years. The CEFC shows how capital is investing in large-scale infrastructure and in the transport sector. As Andrew outlined, and I am pleased to say, Aurizon leads the way in the long-haul freight sector in its approach to sustainability, in its investment in Battery Electric Locomotives, Battery Electric Tenders. Also, importantly, a very effective efficiency value driver we call Ox Mountain, of which Aurizon owns a majority position, and of which I was one of the founding board members. With that background, I would be delighted to continue with Aurizon.
I also confirm that I have the time, and I am committed to the creation of value for shareholders. Thank you for your endorsement. I also now hand over to Tim.
Thank you, Sam. Well, ladies and gentlemen, you have already heard rather a lot from me, so I will be quite brief as I talk to my re-election. I have got great confidence in the potential ahead for Aurizon, and with your support, I am looking forward to working for another three-year term to shape and realize this opportunity. You would have seen from my background that I bring three key skills to bear as part of this team generating shareholder value. Firstly, financial skills as a chartered accountant. Secondly, 25 years as an investment banker, where I learned what catalyzes value and share price performance. Finally, government skills gained from three years working in a senior role with a very senior federal cabinet minister. As Chairman, my role is to build a board that challenges management constructively and then backs them decisively.
My background, banking insight into what creates value, financial rigor, and experience in government means that I understand the hard questions to ask, the power of building consensus, and when to commit. I place great importance on making sure every director's voice and perspective is heard, especially when they dissent. I am delighted to be a fellow shareholder with you in Aurizon and would appreciate your support. Thank you very much. Ladies and gentlemen, we are going to now move on to the voting for the items and the relevant Q&A associated with that, and I will now run through some housekeeping in relation to voting and questions. Attendees here in person have a colored admission card informing you about your individual right to vote and ask questions today. For those with white cards, your voting paper and instructions are on the reverse side of that card.
Voting cards will be collected at the end of the meeting by the returning officer and his colleagues. All eligible shareholders have the opportunity to vote in advance of the meeting. Subject to the voting exclusions detailed in the notice of meeting for items two, four, and five, and shareholders having marked the appropriate box, any open proxies will be voted in favor of each resolution. For those who need to leave early, you can cast your vote online at any time while voting remains open or complete your voting card and hand it to a Computershare representative as you leave the room for those here physically. For those online, there is a polling icon where you can cast your vote. You can change your vote at any time until voting closes. Voting will be conducted by way of a poll. Lewis Brimelow of Computershare is appointed the returning officer.
Voting is now open until the close of the meeting. Shareholders or proxies intending in person who wish to ask a question should raise your hand with your white or blue shareholder admission card, and a microphone will be brought to you. Please state your name and any organization that you represent and then ask your question. Online attendees can submit questions at any time by selecting the Q&A icon on your device to ask a question verbally by following the instructions below the webcast window. Questions that have been received from shareholders in advance of the meeting will also be addressed. For efficiency, any questions addressing the same or substantially similar topics can be consolidated. I will now move to questions. Today, as I said at the beginning, we intend to take questions on all items of business up front.
There are several resolutions, finance reports, remuneration reports, director re-elections, granted performance rights, et cetera. We are going to do all the questions in one whole rote, and then we will move thereafter to show the proxy. When we do each, then we will put up each resolution and run through them and show you the proxy votes, and then we will be able to go from there. We are now moving to questions, and I would ask if there are any questions on the floor. Yes, sir.
The nationalizing of the rail lines in WA, will that have any impact on the business? Also, any below rail assets that you own over there, will you be duly compensated?
The question about taking ownership of the railway lines within Western Australia back into government ownership. I have been on the record as saying that the deterioration in volume in Western Australia on rail over the last decade has been quite substantial, and that I think that the current moves by the government recognize that issue and would be a net positive to Western Australia. As far as Aurizon is concerned, Aurizon does not own any of the railway track in Western Australia, so it does not have any prima facie impact other than any move that increases the amount of volume that goes by train would be beneficial to Aurizon as an above-rail operator.
Thank you, sir.
Yes, sir.
Good afternoon. [George Bomber], director of Fairco Proprietary Limited, shareholder. Earlier this year, you had some rail disruption in Queensland with rail distortion, which had to be repaired and obviously spent a bit of money. Were the rails put back to the same standard, or was there a change in the standard to hopefully eliminate that problem in the future?
Andrew?
There has been a number of issues with rail distortion, so I am not particularly focusing on the particular one that you raised. When we get issues like that, and if it is pertaining to the Central Queensland Coal Network and not QR Track, we do a repair to a standard that is well-established. That standard is reviewed from time to time against any improvements in engineering considerations, metallurgy. We may from time to time also learn from previous mistakes, and we apply those learnings to improving our standards, and then we actually change the standard. We will fix things when necessary to the new standard over time.
Thank you, sir. Any other questions in the room? Yes, ma'am.
Hi, [Kate Painter]. Andrew, first of all, I would just like to say thank you for your leadership, your commitment to staying power when the market was so negative on the One Rail purchase, and we are really going to see so much come through, I am sure, in productivity gains over the next few years. So, thank you for that and for the people skills. Just a question, could you just give us a little bit more, please, on the battery driving locomotives and how far along with that? Also, with TGE, how many of those customers do you think you have progressed onto rail from road? All of that I see is really important because emissions, of course, 30% of them come from transport. Thank you.
Well, thank you. Thank you very much for your comments before your question. There are two related battery electric activities that are being undertaken by Aurizon. The first one is the building of the battery electric loco, which are a refurbishment of a diesel electric loco to a battery electric loco. That is being done at Redbank, just western Brisbane. That has reached the stage of having been constructed. It has entered into the final stages of construction before commissioning. The intention then is to take it to Western Australia and start conducting trials, and then ultimately operation with South32 early in the next calendar year. So it is getting close. The second battery electric activity is the Battery Electric Tender. That project started a little later than the battery electric locomotive. There are broadly two components to it.
There is the refurbishment of an old diesel electric to make it able to work with and tow and interact with the actual Battery Electric Tender behind it. That work is well advanced, that refurbishment. The Battery Electric Tender is finishing engineering and all the safety testing that has to go on, because essentially, a Battery Electric Tender is a large wagon with a lot of batteries and energy on board. We have got to manage the construction of that well. That work is just about to enter into the construction phase. Those two items will be taken, again, to Western Australia, and they will be put into work in the 2028 calendar year with Alcoa. We are moving through those prototypes well.
As far as the reference to Road to Rail, the predominant Road to Rail activity has not been with the containerized freight part of the business as yet. The biggest activity on Road to Rail was with BHP Copper in South Australia, where we established a freighter service from Adelaide to a newly constructed depot terminal at a place called Pimba, some 500 km northwest of Adelaide and in the centroid that allowed trucks to go from that terminal and short-haul to a number of the BHP mining operations. That activity has taken a substantial amount of haulage away from road and moved it to rail. The figures I have seen are some 13 million kilometers of truck haulage has gone to rail, and that is five services a week running 500 km.
Between the Adelaide depot and the Pimba depot, you get, as a result of that, not only to your point in your question, much lower emissions, but there is significantly less congestion on the road, and I have witnessed that myself by driving the road, but I have also had that feedback generally. It is also safer. Then, of course, as you said, lower emissions. That is the single largest thing that we have done in the past year.
Looking forward, we have been part of encouraging, and I applaud the federal government for putting in place a AUD 55 million incentive called the Track Incentive, and that is designed to encourage freight forwarders to put containers on, take containers from road and put them onto trains. We have put in application to that process with the intention of getting quite a significant boost to our freight business from that specific road to rail conversion.
That came about because of the Iran war, the shortage of diesel, and the obvious benefit recognized by the federal government that freight moved by train has roughly five times the less consumption of diesel than freight moved on road. It is targeted and powered very much by the most recent issues to do with the scarcity of and the price of diesel, and I see that as being something that will be quite supportive going forward. There are many other activities, but those are probably the two that I would bring to your attention. Thank you.
Thank you, Andrew. Are there any other questions here in the room? Yes, sir.
Thanks, Mr. Chairman. [Ken Ryan] is my name, just a small shareholder and a member of the company now since the days of QR National, so I know a little bit about you, and I am pleased to come out in the rain today to support you once again. Just a couple of little questions. It appears that the northern extension of the Inland Rail project, the one that had all the publicity, that has been placed in mothballs. I wonder, does that have any impact on the long-term outlook for Aurizon? This maybe presents an opportunity. That is my first question. The other little question, the Whyalla Steel Works I see is in the media once again. I wonder, does Whyalla owe Aurizon any money, and if it does shut down completely, would there be any direct or indirect impact on the company? Thank you.
Sure. I might talk first about the Inland Rail, and then Andrew might chat about Whyalla. The Inland Rail was paused between Parkes and Brisbane. I emphasize the word pause because the rail corridor has been retained. It was paused because there was very great uncertainty about the cost and about other aspects of the engineering of that line. What the government did do, though, was to reallocate some of the billions of dollars that had been allocated to Inland Rail, and they allocated an additional AUD 1.75 billion towards track maintenance and upgrading of the track of the other ARTC network. They also put in place the AUD 55 million Track Incentive that Andrew spoke about earlier, and that was on top of AUD 1 billion that was allocated to rail improvement in the 2025 budget.
When we at Aurizon look at that, we do feel that the money allocated to improve the ARTC track is money that will have a much shorter and more direct impact on Aurizon, our efficiency, and our profitability, and we support that. The bad weather this year, for example, did highlight some very significant washouts in the South Australia area that impacted our business, in particular, George's business, for quite a long time. So long, long term, we believe in Inland Rail. It will be the right thing for Australia. But in the very short term, the pause and the reallocation of funds to network improvement is a good thing for Aurizon. Andrew, you might chat about Whyalla.
Yeah, sure. So with Whyalla, I think there are two things to think about when it comes to Whyalla. From a rail perspective, there is work that we had provided to Whyalla to move iron ore from the iron ore mines near the Whyalla Steel Works, and then we operated rail equipment inside the steel works, so we supported the steel-making process. The iron ore mines ceased, scaled down dramatically over the last year or two, and ceased operations. The steel making, there has been an announcement that the furnace will be turned off for some time. There is no clarity about and no public statements about the money that has been involved in those decisions. From an Aurizon point of view, no funds are owed to us by Whyalla. We have dealt with that issue in prior years.
There is, because of the furnace, the most recent decision to shut down the furnaces, there is some cost associated with the small number of employees that are left in Whyalla and that sadly we have to find alternative employment for or, should they determine to leave the company, we have to deal with that issue. But that is very, very small now. The operations are so much more. Some significant changes have happened in past years, and the very small change that would occur financially with that will not affect our guidance for the bulk and containerized freight business.
Thank you, sir. Are there any other questions in the room? Right, James, we might go and see if there are any online questions, sir.
Thanks very much, Tim. I have a number of questions that have been submitted ahead of the meeting and online during this meeting itself. Our first question is from Ms. Natasha Lee. There has been a large increase in lease liabilities, which reflect the present value of these liabilities. Can you please advise what the growth trajectory is for these future lease liabilities?
Sure. We'll start by putting the lease liabilities in context. Aurizon has about AUD 5.2 billion of debt from various sources, and at the last balance date, the value of lease liabilities was AUD 283 million. So it's a small financial exposure in the context of broader Aurizon. The primary reason for the growth in lease liabilities is because we have been growing our terminal business, and most of those terminals are leased. We are always open to owning terminals and other assets. We're also open to leasing them. It depends on the economic equation, but we aren't expecting there to be a very substantial blow-out in leases in the future.
Another question from Ms. Lee. The board skills matrix uses shading rather than numbers to show the levels of competency. It would be better to provide a definitive number rather than the somewhat ambiguous shading method.
Yeah. Look, so board skills matrices can be vexed. Ultimately, the board operates as a team, and what's relevant is how the team delivers against the skills matrix. I think that an attempt to try and be too precise about how many fit within which level sort of does work against the team analysis. I'm happy with the way we currently show our skills matrix. I think it gives shareholders a very clear view about the skills that are on the board, and can I say, I think the board covers the skills we need incredibly well. So, I thank the lady for her comment, but I think we'll probably leave it as it is.
Thank you. And the final question from Ms. Lee. The auditor's remuneration has increased significantly, especially regarding the financial audit. Can you please talk through that increase?
Sure. Look, in simple terms, the predominant reason for the increase was the reporting for the first time this year of sustainability reporting under AASB S2. That has been the large item. There are small items of inflation and other items in the audit fee. There is a conversation every year between myself, the Chair of the Audit Committee, Sarah Ryan, and the auditors, along with the CFO, Ian Wells. We have a clear conversation with the auditors to make sure we are accessing efficiencies and getting the greatest value from the technology that is emerging in their field.
Thank you. I now have three questions from Mr. and Mrs. Milo Tavanich. With the dividend payout ratio of around 90%, what operational or financial improvements does management believe will support a sustainable dividend growth without weakening the balance sheet?
We have a dividend policy of paying between 70% and 100% of our underlying NPAT out as dividends. We have set that policy with a view that it should change rarely, and we currently pay out 90% this year. Last year, we paid out an average of 80%. As Andrew reminds me, changing the dividend policy and payout ratio, particularly if you go down, is never well-received. We have set that 90% in the expectation it can be maintained there for the medium term. We also set the dividend on the basis that we generate the profits and the cash profits through which to pay that dividend. The way that we are going to give dividend growth to shareholders, assuming the payout ratio stays at 90%, is to grow the earnings of the business. Shareholders will have noted that we paid AUD 0.23 per share dividend last year.
Shareholders will note we have guided for between AUD 0.23 and AUD 0.24 per share this year. Growing profitability, operating the business well is how we will deliver shareholders dividend growth.
Thank you. Follow-up questions from the same shareholders. What proportion of current coal and network earnings does management expect to be replaced by growth in bulk and containerized freight over the next five years?
Andrew, do you want to have a crack at that?
If you were to think back to a presentation that Aurizon made back in 2020, we talked about the overall strategy for the business, which was to manage coal and network well. And we noticed that the bulk business had gone from an unprofitable business to one that was actually making a reasonable amount of money. And we did significant work to understand how far that business could grow over time. Also back in 2020, there was the start of a lot of thinking, not in Aurizon but in the general community, about the long-term nature of coal. There were many questions about ESG that were raised in meetings. The thinking about that was that there are two types of coal.
There is coal used in steelmaking at the moment and for the foreseeable future, given there is no known alternative for steelmaking with coking coal at scale and price globally available. Steelmaking coal is going to be in demand for a substantial period of time. Equally, we looked at the history of thermal coal and looked at the future of thermal coal. And if you think that most thermal coal out of Australia goes into Asian markets, if you look at the age of power plants in those end markets, the average age of the power plants at the time in 2020 was 13 or 14 years. It is now 14 or 15 years. Power plants, if you look at Australia, can last towards 50 years. Generally speaking, you think of a power plant lasting around that 35 or 40 years. So thermal coal has pretty significant life.
While we have a plan to manage those businesses well into the future, we can't deny the fact that at some point in time, I suspect a long time from now, you'll see a decline in the volumes of particularly thermal coal that are used because it can be replaced by alternatives production of power production mechanisms. We've got a long time for these sort of things to play out. The intention back in 2020 was we took the opportunity to start building our bulk business. The record returns last year showed that we can grow the bulk business well, and with the announcement of things like the NYK car import contract, the contract with CEVA, and other things to do with landbridging and the establishment of the containerized freight business, you can see a growing business taking place.
All that said is that the business will grow. It's not easy to predict how long your coal, thermal coal and metallurgical coal segments operate globally, probably for a long time. Picking the exact date and/or size when one matches the other is probably not easy, if possible. But directionally, it is possible. That's why we established that strategy, and that's why we've been executing against that, and that's why you've seen the bulk and containerized freight business growing as they have and bulk reaching a record volume, record performance financially last year.
Thank you, Andrew.
The final question from Mr. and Mrs. Milo Tavanich is, given the current leverage in capital expenditure requirements, what level of debt reduction is management targeting before considering any further share buybacks or increasing the dividend payout ratio?
The board thinks very carefully about the optimal capital structure and the level at which Aurizon's weighted average cost of capital is reduced. We have a BBB+ credit rating in both the network debt structure and the Aurizon Operations network structure. Our judgment continues to be that is the correct credit rating, and we weigh up each year the amount of debt that we should have and the capacity to pay both dividends and share buybacks. As I said before, generally speaking, we expect to be able to pay the dividend every year. The absolute gearing reduction that occurred between 2025 and 2026 was a change in gearing from 3.3 x debt to EBITDA to 3 x debt to EBITDA. At the moment, the board is comfortable that allows us a balance to spend the CapEx we need to both maintain the business and grow the business.
It gives us the capacity to pay the dividend, and if we need to, it gives us the capacity to do a share buyback, and all of those things are assessed every year at the time when we do the budgets. Thanks very much.
Thank you. I have now a number of questions from Mr. Stephen Mayne. Which recruitment firm assisted with the recruitment of our two new directors who are up for election for the first time today? Was it a genuinely competitive process with other candidates interviewed by the full board? Did either Andrew or Amanda know any of the existing directors or any of the management team ahead of the recruitment process?
Sure. I will not name the firms, but there are five recognized rec firms that are the global leaders in executive and board recruitment, and we used one firm to hire Amanda, and we used another firm to hire Andrew. In both instances, the board had a clear view about the skills matrix that we wished to achieve and what we were looking for in that director. We considered a wide range of people. That wide range of people were interviewed.
The board of directors got to interview each candidate. I am not aware that there was any particular relationships that exist. In fact, I am prepared to go so far as to saying Amanda and Andrew were both new to Aurizon and the board. They were not mates of anybody. I am delighted that both of them have joined, and they have both done an incredibly good job since they have joined.
Very much an open-minded, external, fully appropriate, best practice governance recruitment process.
Another question from Stephen Mayne. Aurizon is Tim Longstaff's first public company chairing role. Everyone, of course, has their first, although not usually as big or as complex as a AUD 6.4 billion company. How was the Chair succession process run? Was it handled entirely internally? Were there multiple candidates? Did it include those that are not on the current Aurizon board?
Yep. I will save the second part for after this. Thank you.
Thank you. Under the leadership of our former Chairman, Tim Poole, the board ran a very rigorous Chairman succession process exactly in line with how Tim outlined the appointment of the new Directors. Was there another part to the question?
Did it also include external members that weren't already part of Aurizon board?
External candidates? Absolutely.
Yeah.
Yes. And the full board was involved in the whole process.
Great. Thanks, Sarah. A follow-up or part B to that question. Tim, what are the biggest changes in process, reporting, delegations, committee structures that you've introduced since taking over as Chair?
Look, since taking over as Chair, we've had two primary priorities at Aurizon. The first has been to deliver FY 2026. Shareholders will recall that at June 25, our share price was close to AUD 3. It had traded poorly. FY 2025 was a tough result. And I'm incredibly proud to be able to stand here today and say that we grew EBITDA by 9%, EPS by 25%, and dividends by 46%.
When I took over as Chair, the first thing we had to get right was to work with Andrew and his team, who did an extremely good job in delivering an excellent financial outcome for shareholders that demonstrated the potential of Aurizon, and importantly demonstrated the growth capacity in BCF. The second thing we had to do, which was a critical decision in my first board meeting as Chairman, was to make a decision about whether we retain network or not. We decided to retain network. We did that because it was in the best long-term interest of Aurizon.
That decision has been very well-received by shareholders, and even the shareholders who had been advocating for us to consider a different pathway, were grateful that we had addressed the question, we had done so seriously, we had reached an answer, we had communicated it, and we had talked through some of the reasons. Those shareholders, many of them are continuing as shareholders today, and they are very happy. In fact, all of them, I believe, have continued as shareholders and they are very happy.
To answer Stephen's most direct question, though, Aurizon was in great shape when Tim Poole was running it and it is in great shape now. We have tinkered at the edges of governance, very small things that are so small, I really will not even go through them. But Tim ran a very cohesive board and my aim is to run a cohesive board, and I am very pleased with how it is going.
The final question from Stephen Mayne is perhaps best read as a comment rather than a question. In terms of the AGM process, thanks for disclosing the proxies early to the ASX, along with the formal addresses, and well done for achieving strong voting support on all the resolutions today. However, it is disappointing not following the agenda today, and dealing with all questions in one sitting rather than one by one throughout, following the agenda, as shown on the screen. Please respect the AGM process in next year's AGM.
As they famously say on Q&A, we will take that as a comment. Thank you very much. Any other questions online, James?
No further questions online, and I have been advised there are no telephone questions either.
Excellent.
That concludes the questions.
Any final questions that people have had listening to those that they may have in the room? Yes, sir.
I will put them.
That is okay. We want the people online to be able to hear you as well, sir.
With the battery electric, are you working in collaboration with any of the mining companies or any other railways?
The answer is yes, we are working in collaboration from a Battery Electric Tender with mining companies from a trial point of view. The actual construction, no. But in the actual operation of it, of course, they are very eager to get their hands on it and actually figure out how the technology works. With the actual construction of the Battery Electric Locomotives and tenders, we are working with rail equipment constructors like Progress Rail, which is a division of Caterpillar, and some very large battery expert companies from a global point of view. Yeah.
Tremendous. Okay. Anyone else? Excellent. As we have now answered all the questions, I will put each of the resolutions to the meeting. Each item being voted on is passed as an ordinary resolution. Please record your vote on each item as it is shown, now or at any time until the polling closes. I will bring up onto the screen, please, resolution one on the financial statements. The first item relates to the financial statements, directors' report, and independent auditors' report for the financial year ended 30 June 2026. As there is no vote on this item and all the questions have now been answered, I declare that the reports have been received and considered, and we will now move to the next item of business. Item two is adoption of the remuneration report. The second item is the adoption of the remuneration report. This is a non-binding resolution.
Details of the proxies received are shown on the screen. The board recommends that shareholders vote in favor of this item. As a voting exclusion applies to this item, any votes cast by those who are excluded from voting will be disregarded. The next item is the election of Amanda McMillan OBE. The board appointed Amanda as a director with effect from 1 January 2026. Details of the proxies received are now on the screen. The board, with Amanda abstaining, recommends that shareholders vote in favor of this resolution. The next item is the election of Andrew Adam. The board appointed Andrew Adam as director with effect from 1 July 2026. Details of the proxies received are shown now on the screen. The board, with Andrew abstaining, recommends that shareholders vote in favor of this resolution. The next item is the re-election of Samantha Tough.
Details of the proxies received are now on the screen. The board, with Samantha abstaining, recommends that shareholders vote in favor of this resolution. As the next item relates to my re-election, I will hand the chair over to Sarah.
Thank you, Tim. Details of the proxies received in relation to the re-election of Timothy Longstaff are now on screen. The board, with Tim abstaining, recommends that shareholders vote in favor of this resolution. Thank you. That concludes this item, and I now return the chair to Tim.
Thank you, Sarah. The next item is the grant of performance rights to the Managing Director and CEO. Details of the terms of the grant are included in the notice of meeting. The proxy votes received are shown on the screen. The board, with Andrew abstaining, recommends that shareholders vote in favor of this resolution. As a voting exclusion applies to this item, any votes cast by those who are excluded from voting will be disregarded. The last item is the approval of potential termination benefits. Details of the terms of the benefits are included in the notice of meeting. The proxy votes received are shown on the screen. The board, with Andrew abstaining, recommends that shareholders vote in favor of this resolution. A voting exclusion applies to this item, and any votes cast by those who are excluded from voting will be disregarded. Ladies and gentlemen, thank you.
This concludes the consideration of all items of business for this meeting. As the poll will be closing shortly, I ask everyone to finalize their votes either online or by completing and signing your voting card. Once the poll is closed, votes will no longer be able to be submitted. For those in the room, please put your completed voting card into a ballot box held by the Computershare attendants who are beginning to rove around the room. If you require assistance, please raise your hand and a representative from Computershare will assist you. I will take a short pause here of about 30 seconds to enable people to complete any administration they might have.
There is someone.
Nothing? Yeah. Should be someone over there, lady. Right, I think there is one more up the back, sir. Gentleman seeming to hand his in, and some others. One here. Excellent. Has anyone been unable to hand in their voting form? Okay. In that case, thank you. I now declare the poll closed. The results of the voting will be notified to the Australian Stock Exchange and placed on the company's website as soon as they become available. I will bring now the meeting to a conclusion. As there is no further business, I will declare the meeting closed. Thank you for your attendance today. And for those in the room, you are more than willing, and we would love you to join us for afternoon tea in the room just outside. Thank you very much.