KiwiRail – Connecting New Zealand

Peter Reidy, KiwiRail Chief Executive

April 2016

Who we are

Asset Maintenance Network Infrastructure

Public Transport Tourism Intermodal Freight

Property

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A trusted Kiwi owned logistics partner growing New Zealand

Full Container Load (FCL) Linehaul NI & SI services IMEX, Bulk, Forestry, Domestic sector

Scenic – Alpine, Coastal & Northern Explorer Interislander

Maintenance Construction Track Access Train Control

Rail Rolling stock Ships

Leasing Development

Auckland’s Metro Network Tranz Metro Wellington

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Avoiding more than 1 million truck movements pa

Avoiding more than 200,000 tonnes of carbon emissions

Move 18 million tonnes of freight pa

Transport 30% of New Zealand exports

Freight

What we do – we move freight and people

People

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Connecting people & places More than 13 million passenger trips per year

Reducing congestion in urban centres More than 15 million passenger journeys in Auckland

Reducing NZ’s carbon footprint More than 27 million low carbon commuter journeys per year

What we do – we move freight and people

An integrated business model

Below Rail Infrastructure Track 3500km Tunnels >140 Bridges > 1500

Above Rail Infrastructure Locomotives ~190 Freight wagons >4500 Ships 3 Property >18000ha

Total Assets : $948.6m

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External Revenue

Revenue mix

$700mpa

7 KiwiRail – Growing New Zealand JULY 2015

Freight Trading Revenue By Sector

Growth achieved through ongoing shift from road to rail

Revenues impacted by global commodity demand

Our network

Reliability

Passenger Growth Safety

Efficiency

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67% reduction in mainline train derailments

2 million litres of diesel saved with efficiency system

6% increase in Interislander passengers 8% increase in Scenic Journey passengers

Freight growth

26% reduction in total recordable injury frequency rate (TRIFR) 40% YTD to March 2016

Growth in IMEX sector $4m over prior year

Financial $27m operating surplus

Our performance July – December 2015

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Financial self-sufficiency of the network is not achievable

Insufficient freight density in New Zealand to fully fund the network

Import/Export and Domestic freight sectors are growth opportunities

Opportunity to reduce costs / improve productivity to lower breakeven point

Above Rail is cash positive

Spillover benefits accrue to New Zealand road users not to KiwiRail

Insights – Commercial Review 2014/15

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Big ship strategy to PoT

Milk powder

Milk powder

Domestic freight

Export to Tga

Imports to Akl

Out

Market changes forcing a new Operating Model

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2009-2013 Business Case for Rail

2014 - 2016

Integration

One KiwiRail

2015 – 2018 Simplify the business

Standardise our assets

Invest in our people

Productivity targets

FY16 $20-30m

FY17 $20-30m

Investment Consolidation & Recovery

Building competitiveness

KiwiRail Transformation

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Vision:

Goals

Aligning the business around common themes

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Bigger ships to large NZ ports

Strong drive for supply chain efficiency

Development of inland freight hubs

Population shift northwards

Further consolidation of transport providers

Auckland rail network resilience – Auckland

Transport collaboration

Upper North Island Focus

Support 12 trains / day Golden Triangle

o Auckland third main

o Kaimai tunnel

o Targeted renewals (signals, rail grinding)

Bridge replacement

Level crossings

Train Asset Standardisation

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Upper North Island Capital Focus

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Critical to freight and Auckland metro – no room for additional services

Enables another six freight services during peak hours

Provides easier access for POA shunt to Wiri Inland Port

Requires 7km of track (2km built, Otahuhu - Middlemore)

$50M of funding required to complete

$3M to add Traction

Auckland Third Main

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Third Main

POA Wiri

Third Main

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Infrastructure:

o Hamilton – Palmerston North line

o Mainfreight Te Rapa siding

o Auckland MetroPort/Southdown

o Tokoroa Siding

Inland hubs (next 1-2 years):

o Northgate, Waikato (PoA)

o Mt Maunganui (PoA)

o Midland Port, Rolleston (LPC)

o New Plymouth (CentrePort)

Network Capacity Improvement

Collaboration with NZ Transport Agency

Optimising land transport corridors

Governance team in place

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Optimising road and rail corridors for NZ Inc. benefit

Enabling NZ Export growth • Intermodal freight focus – Rail and

connectivity • Enabling inland freight hubs Reducing Auckland road congestion • Auckland network

upgrades/Investment • Sustainability

o Truck equivalent 1mpa o Co2 emissions 470 kpa o Fuel savings 2m/litres pa

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True value of KiwiRail to New Zealand

Mount pic to be inserted

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One KiwiRail transformation is building momentum

Intermodal freight and tourism growth focus

Network capacity and resilience improving

Focus on simplifying the business to improve competitiveness

Changing the performance conversation around True value of KiwiRail to New Zealand

In summary…

“The current New Zealand Government’s investment and growing confidence in KiwiRail is a sign of an emerging understanding of the importance of rail to the New Zealand economy.” Bruce Plested, Executive Chairman, Mainfreight

Questions welcome