Toll Holdings Limited ABN 25 006 592 089
Level 7/380 St Kilda Road Melbourne Victoria 3004
Tel: 61 3 9694 2888 Fax: 61 3 9694 2880
13 May 2011
The Manager Australian Stock Exchange Company Announcement Office Level 4 20 Bridge Street Sydney NSW 2000 Lodged Through ASX On Line Total No. of Pages: 178
Dear Sir
INVESTOR DAY PRESENTATION SLIDES
We enclose Presentation Slides for Toll Holdings Limited’s Investor Day for immediate release to the market.
Yours faithfully TOLL HOLDINGS LIMITED
Bernard McInerney Company Secretary
TOLL GROUP INVESTOR DAY
13 May 2011 Toll Investor Day - Agenda
Presentation Speaker 0830-0900 Registration 0900-0915 Opening/overview of Toll Paul Little AO, CEO 0915-1000 Global Resources (incl Q&A) David Jackson 1000-1045 Global Logistics (incl Q&A) Wayne Hunt 1045-1100 Coffee Break 1100-1145 Global Forwarding (incl Q&A) Hugh Cushing 1145-1230 Global Express (incl Q&A) Shane O’Neill 1230-1315 Lunch Break 1315-1400 Domestic Forwarding (incl Q&A) Paul Ebsworth 1400-1445 Specialised and Domestic Freight (incl Q&A) Mal Grimmond 1445-1515 Finance and IT strategy (incl Q&A) Brian Kruger 1515-1530 Wrap-up and concluding remarks Paul Little AO, CEO 1530-1600 Coffee Break / end of Investor Day
Toll Group 2 TOLL GROUP OVERVIEW
Paul Little AO – Managing Director 13 May 2011 Toll Group
. Toll Holdings is the Asian region's leading provider of integrated logistics services, generating annual consolidated revenue of $6.9 billion in 2010 and operating a network of 1200 sites in 55 countries . Founded in Australia in 1888, Toll became a public company in 1993, and has since grown to become a global integrated logistics provider . Toll’s vision is “To be the most successful provider of integrated logistics solutions to the Asian region providing customers with global reach”
Toll Group 4 Toll Growth Pathways
. Secure and organically grow our valuable Australian market position . Build global scale and yield in the high growth global forwarding market . Increase exposure to large and growing resource logistics market . Leverage our Australian expertise to build a regional global express network . Grow market leading contract logistics offer in target geographies and market segments . Leverage Group scale to build competitive advantage
Toll Group 5 Toll Group’s Global Footprint
Toll Group 6 A$6.9 Billion Revenue*
Toll’s history of acquisitions and improving organic growth, have seen consistent revenue growth over a number of years A$ billion
* on a continuing operations basis Toll Group 7 Toll’s Revenue Breakdown by Sector
Retail and - Fast Moving Consumer Goods (FMCG) FMCG - General merchandise
- Machinery and equipment Mining & - Oil and gas project logistics Resources - Mine site consumables
- Material planning & procurement Government - Defence logistics - Humanitarian aid
- Original Equip Manufacturing (OEM) parts Automotive - Finished vehicle distribution and PDI - Aftermarket parts and accessories
- Metal and non-metal products Industrial - Inputs to construction and equipment - Fabrication, casting and forging product
- Consumer Services - Transport - Utilities - Paper & Packaging Other -ICT - Finance and Insurance - Health and Pharma - Chemicals and Agribusiness - Media & Print - Business Services
Toll Group 8 World Economic Growth Forecasts
Forecast GDP Growth (%) 10 Forecast GDP Growth (%) 10 8 Canada United States 8 6 6 4 4 2 China 2 India 0 2011 2013 2015 0 2011 2013 2015
Forecast GDP Growth (%) 10 8 United Kingdom Germany 6 Forecast GDP Growth (%) 10 4 8 Australia 2 New Zealand 6 0 4 2011 2013 2015 2 0 2011 2013 2015
Toll Group Source: IMF April 2011 9 World Trade Two way merchandise trade flow (2009)
US$1.6trn
US$1.0trn Intra Asia
US$0.8trn
US$0.2trn
Toll Group Source: WTO 10 Operating Divisions
Toll Group
Toll Toll Toll Toll Toll Toll Global Global Global Global Express Domestic Specialised Resources Logistics Forwarding Forwarding & Domestic Freight David Jackson Wayne Hunt Hugh Cushing Shane O’Neill Paul Ebsworth Mal Grimmond Provides logistics World class International Market leading Domestic freight Provides a services to the oil contract logistics freight forwarding express freight forwarding across comprehensive & gas, mining, and solutions provider and advanced operator in Australia and New suite of options government and in the Asia Pacific supply chain Australia providing Zealand Australia-wide for defence sectors in region management time sensitive palletised freight, Australia Asia and services freight distribution, liquids distribution, Africa and top ten through to express logistics relocation services provider in Japan
Toll Group 11 TOLL GLOBAL RESOURCES
Toll Investor Day - 13 May 2011 David Jackson – CEO, TGR Toll Global Resources - Overview
Toll Global Resources (TGR) provides end to end logistics and supply chain solutions that enable our customers to focus on their core operations.
By combining the capabilities of niche resource logistics specialists and a global supply chain network, TGR provides fully integrated supply chain, transportation and supply base solutions.
Toll Global Resources
Toll Offshore Toll Toll Toll Toll Petroleum Perkins Shipping Marine Logistics Energy Remote Logistics Services (TOPS) Mining Services
Oil and gas supply Bulk material Provision of fully Onsite, inbound, and Turn-key remote Marine based logistics base management movements with integrated land based outbound road and rail logistics solutions to solutions to customers and associated integrated land supply chain solutions logistics, stockpile miners, government, operating in remote operations in South transport focused on to the offshore and management and and defence Northern Australia and East Asia coal handling in South inland Oil and Gas niche consultancy to organisations into/out of Asia East Asia industry the Mining industry operating mainly in Asia Pacific
Toll Global Resources 2 Toll Global Resources - Overview
Toll Global Resources provides logistics services to the oil and gas, mining, government and defence sectors in Australia, Asia and Africa
. 10+ countries . 2,276 employees . 2010 revenue of $700 million
Consultancy
Bulk Marine Remote Area Haulage, Oil & Logistics & Camp Gas Supply Base, Management Camp Management
Mining, Oil & Gas, Consultancy and Remote Community Logistics
Toll Global Resources 3 SaIF (Safe and Incident Free)
TGR Lost Time Injury Frequency Rate
Safety, accountability and responsibility are central to everything we do. This internal culture enables us to provide low-risk solutions to our customers regardless of where they operate.
Toll Global Resources 4 Strategic Approach
. Continued focus on organic growth for domestic market
. Targeted acquisitions to enter and strengthen key markets
. Link product offerings across business units to create value along the supply chain
. “Blue Chip” customer led expansion offshore “we go where they go”
. Focus on diversification of customers and markets
. Unrelenting focus on operational excellence and safety improvement
. Engage with customers from concept to completion
Toll Global Resources 5 From Concept to Completion
TGR creates tailored supply chain solutions that add value to every phase of our customers’ project life-cycles; from concept to completion.
• Full Service Model
• Stand Alone Component Services
• Simplify and Streamline Customers’ Supply Chains
• Challenge of Lead Times for Delivery of Solutions
Toll Global Resources 6 TGR Value Proposition
Unique Value Proposition (“Why our offer is unique”) 1. Capability – Cohesively present the most compelling, deepest and broadest capability expertise across Asia Pacific and our target markets 2. Expertise – Proven expertise in the mining and resource, energy, defence and remote logistics sectors with superior solutioning skills 3. Superior execution & lowest risk – TGR will consistently deliver lowest risk supply chain solutions on all dimensions (i.e. financial, operational, reputation outcomes etc). 4. Toll Group strength – TGR has the backing of the Toll Group which includes its regional supply chain capability and financial strength & capacity to invest in supply chain solutions to the benefit of customers 5. ‘Best Value’ – Collectively these attributes mean TGR can deliver the most reliable and ‘best value’ integrated supply chain solution to its customers
Toll Global Resources 7 Global Resources – Why Toll wants more of this market?
1. Our current share of the large . Australia mining logistics alone is worth around A$7 billion and growing and growing mining and energy . The Australian energy logistics market is growing. Over A$250 billion investment logistics market is relatively small planned in coming years
2. Our customers are asking us to . Increasingly our customers looking to us to help them with mining and energy partner with them in new logistics solutions outside of Australia markets in Asia, Africa and . Indonesia alone expects 20% CAGR in thermal coal beyond
3. Our product offer is growing together with our capability to . Our unique combination of specialist resources focused services (including a core capability to service and operate in remote places) covers the complete lifecycle deliver across the ‘resources life- from exploration through to operation (and expansion) cycle’
4. Attractive contract backed . While most of the businesses in TGR are quite asset intensive, investments are returns are available to underpin generally underpinned by strong medium to long tenured contracts. asset intensive investments
5. Market participation will feed and . Building a strong presence in the resource and energy logistics market will have complement other group flow-on benefits for other operations throughout Toll e.g. project logistics and activities forwarding, general and express freight
Substantial growth and attractive contract backed returns are available in the resources market Toll Global Resources 8 Selection of Major Competitors
Mining (Aust) Energy (Aust) TOPs
. Mining Companies Insource . Mermaid Marine . Asian Supply Base (Labuan, Malaysia) . BIS . Agility . Technics Oil and Gas . Giacci . Linfox . Kim Heng Marine . EPCMs(1) . Kemarriman Supply Base (Kerteh, Malaysia)
Remote Logistics Marine (Asia) Marine (Aust)
. Dyncorp International . PT Rig Tenders . Seaswift . Tristar (Agility) . Jaya Holdings . Swire Shipping . PT Arpeni Pratama Ocean Line
(1) Engineering project and construction management companies e.g. Bechtel Source: Internal Toll Analysis
Toll Global Resources 9 Mining
Toll Global Resources 10 Australia - Selected Commodities Profile
Strong production growth forecasts underpin TGR’s future Australian opportunity
Iron Ore Thermal Coal Gold LNG
Global majors have a significant presence in Australia Key producers . BHP . BHP . Newcrest . Woodside . Rio Tinto . Rio Tinto . Avoca . Santos . Fortescue . Xstrata . BHP . AngloCoal . Various intl joint venture partners
Key Australian mining regions are generally highly consolidated amongst majors…a trend which is likely to continue Regions . Pilbara . Hunter Valley . Kalgoorlie . North West Shelf . Midwest . Bowen Basin . Olympic Dam . Darwin LNG (East Timor) . Gunnedah Basin . Cadia Valley . Gorgon . QLD coal seam
Production Despite price volatility, production levels have generally maintained positive momentum… Profile Long term growth c.5%² Long term growth c.5%² Long term growth c.1%³ > 100Mt by 20204
500 300 20 800 400 15 600 200 300 t
Mt 10 Mt 200 Mt 400 100 100 200 5 0 0 0 0 FY11 FY10 FY11 FY10 FY06 FY07 FY08 FY09 FY06 FY07 FY08 FY09 FY11 FY10 FY06 FY07 FY08 FY09 FY11 FY10 FY06 FY07 FY08 FY09
Export value A$31.7bn A$12.2bn A$13.4bn A$7.6bn (FY10E)¹
(1) ABARE ; (2) Wood Mackenzie (2010–2015); (3) CRU (2010–2014); (4) UBS estimates Toll Global Resources Source: Analyst estimates 11 Mitchells Acquisition
Mitchell Corporation announced 11 March 2011, completed 2 May 2011
. Western Australia’s second largest mining services provider is a strategic acquisition for TGR . Strong base in WA resources market complementing Toll Mining Services operations in the Eastern States . Mitchells provides its customers with transport services in bulk resources, hydrocarbons and dangerous goods market segments
To leverage Mitchells acquisition:
. Exposure to WA Mining (44% of industry revenue) . Exposure to Iron Ore (43% of industry revenue) . Rio/BHP/FMG forecast to increase production by over 250mtpa by 2020
Toll Global Resources 12 Australian Mining – Toll Now has a Presence in Key Regions
SCOPE OF MARKET ANALYSIS – GEOGRAPHICAL SNAPSHOT Services Include: Gulf region .Bulk Haulage Major mining regions .Inbound & Outbound Transport .Onsite Haulage Other regions/ major site .Train Loading .Stockpile Maintenance & Management Capital city .Dangerous Goods Transport Kimberley Townsville .Warehousing & Storage MacArthur River Bowen Basin .Haul Road Maintenance .Supply Chain Consultancy Pilbara Mt Isa/ (onshore) Cloncurry Ipswich Goldfields
Murchison/ Yilgarn Geraldton Olympic Dam Broken Hill Central NSW
Kwinana Hunter Valley Goldfields
Southern Coalfields South Western Victorian Gold fields Latrobe Valley
Source: Australian Mines Handbook
Toll Global Resources 13 Oil & Gas
Toll Global Resources 14 LNG – Large Opportunity for Growth
Toll Global Resources 15 Existing & Proposed LNG Projects & Toll Energy Supply Bases Darwin LNG Sunrise PNG LNG ConocoPhillips Woodside Woodside
Bonaparte GDF Suez Ichthys Services Include: Inpex Darwin .Supply base services & facility support for offshore Prelude exploration, drilling and production operations Shell .Warehousing & open storage Browse Woodside .Receipt & consolidation
Broome .DG transport & storage NT .Project management Varanus Is. Dampier .Provision & co-ordination of marine vessel operations Wheatstone Barrow Is. .Specialised bulk transport Chevron .Storage & distribution Gladstone WA Jackson QLD Pluto Trains 2/3 Exmouth Woodside Moomba Brisbane Geraldton Scarborough SA Exxon Mobil APLNG ConocoPhillips Perth NSW Gorgon Fisherman’s Landing Chevron VIC LNG Limited Adelaide In Operation GLNG Pluto VIC Santos Woodside Under Construction Melbourne Portland Geelong QCLNG In Development BG Group NWSV Trains 1-5 Toll Energy Supply Bases Woodside Curtis LNG Shell (1) Broome Supply Base is a JV with Mermaid Marine TAS Toll Global Resources 16 Toll Offshore Petroleum Services (TOPS) Redevelopment
. One of 3 major oil and gas hubs in the world . Strategically positioned deep water facility in Singapore, servicing offshore oil and gas sector . Key development is progressing in line with plan . Capital expenditure still on track for A$300m . Increased business development to better utilise the ramp-up warehouse . Completion of new wharf facility has created a valuable revenue stream . Full take up of custom built facilities
Services Include: .Estate Management .Jetty operations .Maintenance & added value services .Logistics
Toll Global Resources 17 Marine Logistics
Toll Global Resources 18 Marine Logistics Australia (Perkins Shipping)
Singapore and Timor Leste
Bathurst Is. Services Include: Darwin Gove Weipa .Vessel Chartering Groote Eylandt .Crew Management and Agency Cairns Kalumburu Wyndham Services .Landing Craft .Workshop and Maintenance NT Facility
QLD
WA Gladstone
SA
Perth NSW
VIC
TAS Toll Global Resources 19 Marine Logistics Asia – Key Trading Areas
Services Include: .Vessel Chartering .Crew Management and Agency Services NT .Provision of Conventional Tugs QLD and Barges Specially Designed with Shallow Drafts .Provision of Self-Discharging Barges with Built-In Sophisticated Conveyor System .Provision of Self-Propelled Barge WA with 360 Degree Retractable Propulsion System and Bow SA Thruster .Landing Craft .Provision of Floating Terminal NSW and Floating Crane for Transhipment Handling at Port and Anchorage
VIC .Provision of Floating Workshop and Maintenance Facility
Toll Global Resources 20 Remote Logistics
Toll Global Resources 21 Remote Logistics
Services Include: .Camp facilities & management .Camp construction .Aviation support .Fuel distribution services Fuel Dist. .Niche value add services
Camp Con.
Fuel Dist.
Camp Mment & Aviation Camp Con.
Aviation
Toll Global Resources 22 Remote Logistics – Key Interface with other TGR Businesses
Product description Project Life Cycle
Camp & . Turn-key asset and personnel logistics management solutions in remote Facilities locations e.g. accommodation, catering, medical and facilities management, . Exploration / Feasibility / Planning Management fuel and consumables procurement
Camp . Project management of construction of camps that service the Defence, Govt . Exploration / Feasibility / Planning Construction or Resources sectors
. Facilities management of remote airports and associated infrastructure. . Aviation support to remote Mining Aviation . Aircraft and helicopter charter and operation to support operations in remote and offshore Oil and Gas projects Support facilities
. Support to remote mine sites and . Turnkey fuel operations including supply, transport, storage and facilities synergy with Mitchells fuel Fuel Services management distribution services
. Across all parts of the life cycle Niche ‘value . Other specialist advisory and consulting services e.g. Risk Management, add’ services Training Services, Movement control logistics support globally for the UN.
Toll Global Resources 23 Opportunities and Outlook
Toll Holdings Limited – Investor Day 13 May 2011 24 Outlook – The Second Half
. Patchy Oil & Gas volumes for Loyang (TOPS) due to lower drilling activity . ‘Wetter’ wet season and cyclonic activity impacted production in all key commodities across Australia . Further reductions in troop numbers in Timor Leste . Competitive pressure on spot marine prices in Singapore . First contract win in CSG in QLD . Good progress on TOPS redevelopment (office building official opening 20 May 2011) . Mitchell acquisition completed
Toll Global Resources 25 Outlook for 2012 “Stronger for Longer”
. CSG opportunities in Queensland . Continued strong demand for Coal (coking & thermal) and Iron Ore in the medium/long term from urbanisation and industrialisation in China, India & Indonesia . Rising Oil price should see increased drilling activities (6-12 month lag) . Commodity prices still strong but high AUD impacting export prices . Cost pressures on production . Labour shortages due to rapid growth driving up labour rates managed through contracts . Significant infrastructure required to support increased production in the Pilbara
Toll Global Resources 26 Concept to Completion Example (Gorgon)
Current Services Offered
Provision of transport (road & marine), Provision of transport (road & marine), labour & handling, offshore container hire labour & handling, offshore container hire and logistics support through supply bases Supply chain consultancy and advice and logistics support through supply bases in Perth & Dampier in Perth & Dampier
Potential Services
Accommodation camp Aviation Support construction & management
Toll Global Resources 27 Questions
Toll Holdings Limited – Investor Day 13 May 2011 28 TOLL GLOBAL LOGISTICS
Toll Investor Day - 13 May 2011 Wayne Hunt – President & CEO, TGL TGL is maintaining a highly focused regional presence as the Asian logistics market matures and yields improve
Source: GIA for Addressable Market growth rates, IMF for population. Asia is 46% of world’s population.
Toll Global Logistics 2 Toll Global Logistics: The Model Providing Integrated Solutions Along The Supply Chain
Asia Pacific with a Global Reach
Toll Global Logistics 3 Clearly Defined Services and Sectors Not all things to all people
Services Sectors
. Warehousing Contract Logistics . Transport . Automotive . Supply Chain . Reverse Logistics . Finished Vehicles and Parts . Value Added Services . Consumer . Beverages . Fleet Management Transportation . LTL . FMCG . Rail / Feeder . Healthcare and Nutrition (OTC) . Road cross border line-haul . Hi-Tech . Audio, Video and Telecom . LLP Freight Management . Regional and Domestic . White goods . Cross-Border . Industrial/Chemicals . Specialized . Components
. Packaging . Medical equipment and supplies Fulfilment . Kitting . Paper / Steel, Packaged Chemicals . Replication . Security Enhancement . Retail . Customer-owned stores . Defence . Apparel . Medical ST Logistics . Humanitarian . Modern supermarkets , chemists and convenience . Procurement . Government . Engineering Services . Airport fuel services Toll Global Logistics 4 Our Footprint : 16 Countries, 11,000 people and 600+ facilities.
Key Focus Areas
AUSTRALIA CHINA HONG KONG National transport and logistics 2,100 staff, 23 facilities with 3.6 ATL Kwai Chung hub with warehouse facilities of more than million sqft, nationwide delivery to capacity of 550,000 sqft 4 million sqft 1,550 locations
INDIA INDONESIA SINGAPORE 2,400 staff in 160 facilities/offices 4 multi-user and dedicated 10 facilities totalling 1.5 million totalling 1.6 million sqft and facilities totalling 48,000 sqft sqft and 700 transport vehicles nationwide transport NEW ZEALAND MALAYSIA VIETNAM National transport and logistics 4 sites with 310,000 sqft and 230 staff, nationwide transport, facilities of more than 1 million sqft transport across Peninsular and and warehousing of over East MY 430,000 sqft THAILAND UNITED ARAB EMIRATES CAMBODIA 7 locations of 790,000 sqft and 2 facilities, including Jebel Ali FTZ National rail operator and cross- delivery to over 5,000 drop point DC with over 340,000 sqft border trucking service via VN in 24-48 hours capacity and TH Other Operations
KOREA PHILIPPINES 5 facilities serving major urban 2 facilities and national areas with 224,000 sqft capacity transport to/from Luzon
TAIWAN 3 facilities, including bonded DC, SRI LANKA totalling 230,000 sqft 13 facilities totalling 300,000 sqft Toll Global Logistics 5 Safety is paramount wherever we operate
Lost Time Injury Frequency Rate Safety Initiatives
. YoY LTIFR improvement of 37%, from 2.83 (Jun10) to 1.78 (Mar11).
. Queensland Safe Work Awards 2011 (by Contract Logistic, Australia)- innovative ideas, leadership and commitment to workplace health and safety.
. Establishment of Minimum Requirement safety net & foundation framework for all businesses within the Asian region
Toll Global Logistics 6 Environment – Rolling out sustainability programs throughout the region as appropriate
Toll Global Logistics 7 Industry Structure Providing tailored solutions to targeted sectors
Toll Global Logistics Revenue % S&SE Asia by Regions and by Sectors N Asia 4.6% 8.0%
Hi Tech Healthcare 3.0% 1.0% SG & MY AU 23.8% 63.6%
Industrial 14.0%
Consumer & Retail 42.0% Automotive 17.0%
Government 23.5%
Toll Global Logistics 9 By 2016, Greater China, the Indian Subcontinent and Southeast Asia will each be bigger than the ANZ market
Contestable
Toll Global Logistics 10 TGL's Asia Pacific Revenues rank us 9th against Global Competition
Top 12 Contract Logistics Service Provider (Based on 2010 Revenues in € billions) 1 13.30 7 1.10
2 3.43 8 1.04
3 3.05 9 0.87
4 2.54 10 0.69
5 1.31 11 0.64
6 1.23 12 0.59
. Ranked by Revenues from Contract Logistics segment . Data based on Transport Intelligence May 2011 report . Currency in €
Toll Global Logistics 11 Toll Global Logistics serves the world’s leading companies in Asia Pacific
Automotive Consumer Industrial & Chemicals
Healthcare Hi-Tech Retail
Toll Global Logistics 12 Strategic Approach
13 Toll Global Logistics Vision to 2016: Grow, Improve & Lead
Differentiated Offer
Focus on Growth
Shareholder Value
Source: TGL Strategic Planning
Toll Global Logistics 14 Momentum is increasing: The rationale for TGL in Asia-Pacific is compelling and exciting
. By 2015: Based on current trends, Asia- Pacific’s economy will: . Be 50% larger than it is today . Account for more than a third of global output . Asia-Pacific is fast becoming the . Be comparable in size to the economies of the United world’s economic epicentre in States and Europe terms of global exports, intra- Asia trade, and domestic . By 2030: Based on current trends, Asia- consumption Pacific’s economy will: . Exceed that of the G7 . Be the largest economic region in the world . Have the largest domestic demand and growth profile.
. We will see the impact of this growth during our 5 year strategic plan
“Asia’s time has come, its role in the world’s economy continues to grow – both in world trade and finance and in economic governance . . . and it will grow further.”
Source: IMF, Finance & Development, June 2010. Toll Global Logistics 15 The TGL Strategy & Roadmap 2006 to 2016
Phase 3 Taking our capabilities and Phase 2 expertise to new markets Phase 1 Capturing & Leveraging the •Continued refinement of our Asia SembLog/Sembawang/Toll Asian Opportunity Pacific Market place products in line Integration & Platform with maturing local & intra-Asia markets Enhancement •Continue to innovate and grow the ANZ •Identifying and Entering new markets businesses (ex-Asia Pacific), that draw upon our •Build standard business protocols. •Leverage “One Toll” to maximize product or vertical expertise, or are underpinned by robust customer •Position and champion Toll brand supply chain value capture (e.g. TGF) contracts, •Restructure and refocus JVs and •Build scale in emerging markets •Continue to expand into new markets alliances to maximize value •Positioning for a maturing Asian market to support or lead other Toll business •Leveraging Toll’s traditional strengths and improving yields. units or by M&A into the Asian platform – drawing on our •Pursue new markets and extend ANZ competencies capabilities via customer contracts and •Divesting non-core operations other Toll group support/led penetration or by M&A. •Moving from an “asset light” to “asset appropriate” model with consequent yield (margin) TGL 5 Year Strategic Plan July 2006 – June 2011 July 2011 – June 2013 July 2013 – June 2016 Toll Global Logistics 16 ... an approach that positions TGL to capture more share of logistics activity in key Asia-Pacific markets
Selected Customers’ 2009 Asia-Pacific Region Share of Global Sales.
17%
35%
13%
15%
18%
16%
6%
Coke HQ announced its global revenue 81% will double as a result of market penetration in China and India by 2020 44% “Les Allen Global Procurement Director Coke Atlanta” 56%
Source: Company websites, customer quote and TGL BD Dept. research.
Toll Global Logistics 17 Opportunities & Market Conditions Our Continued Success 2010/11
Our regional strategy continues to underpin further growth
Major Contracts Wins and Renewals.
India, Tata Steel Holden Australia Singapore
Coleman Camping Australia Ford Australia
Australia Coles Australia Newell Rubbermaid
Australia Woolworths Australia Glovis
China Hawley & Hazel China Bluemoon
China J&J China BlueScope
Thailand Shell Nike Australia
Australia Redox Foster’s Australia
P&G India, Kmart Australia Indonesia, Vietnam Unilever Singapore
Toll Global Logistics 19 Continuing to develop points of differentiation through R&D – IT and Equipment Innovation
. RFID Enabled Applications Platform (REAP)
PALLETIZATI ON . Specialised Coil Carrier Trailer PALLET TAG DETECTED! PalletID: Design BARCODE33462798721 SCAN SUCCESSFUL! PALLETIZED ITEMS QTY MAX Cola (MC00384-84)
. Trailer Design to Minimise Working at Heights & Product Damage
Toll Global Logistics 20 Toll, Lean Up and Running…
. Toll is always focused on supporting our customers’ supply chain challenges with the highest levels of safety and to achieve optimum efficiencies.
. Major benefits when applying “Lean” principles in Toll Auto’s Morningside operations in Queensland : . increased efficiencies for inbound/ outbound functions . lead time reductions Toll Global Logistics, Jalan Buroh site in Singapore . increase parts availability . increase storage capability . facilitate waste removal in the supply chain
Toll Global Logistics, Toll Auto, Morningside Kotmatsu Lean Team in Queensland
Toll Global Logistics 21 TGL’s Government Business Group – Expanding our skill sets regionally
. Leading player in supply chain solutions to the Government Sector in Singapore, specialising in: . Warehousing & Inventory Management . Material Planning & Procurement . Freight Management . Husbanding Services . Dangerous / Hazardous Goods Management . Fuel Supplies & Facilities Management
. Accreditation / Certification . ISO 9001: 2000 - ISO 14001 - OHSAS 18001:1999 . Member of IATA & FIATA . Arms & Explosive License . Pharmaceutical License
. Specialised Logistics capability regionally . Aviation Fuel – SG, MY, IN, East Timor . Medical Services & Bio-Medical Engineering Services . Materials Management in Healthcare Institutions . Preservation & Packaging . Humanitarian Relief & Business Continuity Logistics . Engineering and project management services
Toll Global Logistics 22 Current Market Conditions
. ANZ . GBG . FMCG & Retail market soft . Continued success amidst growing . Toll’s growth is coming from competition solution driven innovation . Industrial sector continues to hold for Toll . Asia . MNC’s growth strategy and complexities of Asia – need for a . Automotive credible partner = Alignment to . Japan tsunami impacting severely Toll’s regional strategy on supply of import vehicles and . India the stand out in organic some OEM parts for local growth manufactures. Expected to . Inflation creating operational continue till Q4 2011 disruptions and margin pressures . Toll integrated model well received . China protectionism frustrates in Thailand, China and India – heavy focus on BD / M&A market entry opportunities
TGL sales pipeline remains strong
Toll Global Logistics 23 Summary
Our End Game . Increased shareholder value . Stable, leading edge work force and a safe working environment – zero accidents . Achieved Industry leadership in our chosen markets
Our Offer . Building a differentiated product offering in our chosen markets, leveraging off our competitive advantages both in country and Asia Pacific . Creating high barriers of exit for ourselves and other Toll BUs
The Prize . Profitable growth for Toll Global Logistics, expansion of other Toll Group niche businesses into the region, confidence and funding to further expand TGL into new markets
Issues & Challenges . Persistent – we need to be nimble, disciplined, committed to our corporate governance principles and confident in our abilities to be recognised for the value we bring to our customers.
Successful Execution . A global acknowledgement of our key strengths by the market . Recognition of being a top quality contract logistics partner.
Toll Global Logistics 24 Questions TOLL GLOBAL FORWARDING
Toll Investor Day - 13 May 2011 Hugh Cushing – CEO, TGF Agenda
1. Toll Global Forwarding Overview
2. Industry Overview and Situation
3. Strategies and Positioning
4. Our Journey So Far
Toll Global Forwarding 2 Toll Global Forwarding- Overview
Toll Global Forwarding provides International Cross-border Air & Sea freight , and customised Value Added Services in Origin and Destination markets to deliver International Supply Chain Solutions More than 70 offices in 30 countries 5,500 employees Annualised revenue of c$2 billion (@FY10 exchange rate)
Toll Global Forwarding 3 Toll Global Forwarding Operating Structure
CEO Hugh Cushing
Commercial Australia & Europe & Director Americas New Asia Africa Peter Sprogis Myles O’Brien Peter Winslow Vincent Magnus Middle East Zealand Hakan Bicil Mark Kellett Products, Marketing & Sales . USA . Australia . China . South Africa . UK Paul Coutts . Canada . New Zealand . Hong Kong . Germany . South America . India . UAE Chief Information . Indonesia . France Officer . Macau . Netherlands Tom Thompson . Malaysia . Demark . Singapore Network . Ireland . Sri Lanka Development . Sweden Chris Fahy . Taiwan . Thailand . Switzerland . Vietnam Human Resources John Goff
Products Air Sea Sea / Air Value Add Land Projects Freight Freight Services Transport Logistics
Toll Global Forwarding 4 Core Competencies
Toll Global Forwarding 5 TGF Geographic Revenue Split
1 2 22% 26%
6 20% 3 16%
TGF 6 months Revenue to Dec 2010
Toll Global Forwarding 6 TGF Safety and Environment
2.50 Lost Time Injury Frequency Rate
2.00 LY FY10 Act FY11
1.50
1.00
0.50
0.00 Jul Aug Sep Oct Nov Dec Jan Feb Mar . Pre-April 2010 TGF 98% white-collar workers. . Acquisitions of Summit & WT has increased proportion of blue-collar workers with associated high risk of injuries. . Toll Safety Management policies and procedures are now in place in all acquired companies
Toll Global Forwarding 7 Industry Overview and Situation
Toll Global Forwarding Transport Intelligence Dashboard 8 8 Global Freight Forwarding Market – 2009
Geographic Split Product Split (Revenue) (Revenue)
Source: Transport Intelligence Toll Global Forwarding 9 Global Top 10 Freight Forwarders
. DHL GF
Others: 57% . K + N . DB Schenker Top 10 Players . CEVA 43% . Panalpina . Expeditors . Agility . DSV . DAMCO . Nippon Express
. The freight forwarding industry is highly fragmented, with top 10 players accounting for around 43%. . The market leader has less than 10% market share. * Source: Transport Intelligence & TGF Analysis
Toll Global Forwarding 10 Global Trade
The global economic downturn severely impacted world trade in the last quarter of 2008 and first half of 2009. Recovery began in the second half of 2009 however despite improvements exports are yet to reach pre-recession levels.
Source: WTO, Transport Intelligence
Toll Global Forwarding 11 Major Ocean East West Trade
Market not yet back to 2007 levels Market just back to 2007 levels
Source: Drewry Container Forecaster 2011 Q1
Toll Global Forwarding 12 Air Cargoes Asia Pac Outbound Volume Trends
Market just back to 2007 levels
~ 44% of Industry Total
Source: IATA & TGF analysis *FTK = Freight Tonne Kilometers
Toll Global Forwarding 13 Market Conditions
. Toll effectively started its global forwarding product in FY2008.
. First three years of TGF life cycle in the gloom of the GFC.
. Market conditions in FY 09, FY 10 and FY11 “toughest ever” in global forwarding sector.
. Key TGF markets in US, UK, Middle East and ANZ all volatile.
. Q3 global trade levels still below 2007.
Toll Global Forwarding 14 Strategy & Positioning Business Growth Model
Phase 1 • Top-down Direction Setting • Rapid Execution
Phase 2 Margin Improvement • Cross-functional Teams Value Creation • Re-engineering
Ops M&S Product IT Finance HR Phase 2 Process Improvement Phase 1 Network Creation Build Scale & Capability Acquisitions
Toll Global Forwarding 16 Toll Global Forwarding – Why a key market for the Group?
1. The forwarding market is large and fragmented providing long term growth opportunities.
2. Asset light (once established), network business model
3. Asia base strategy closely aligned to Toll’s regional growth plans.
4. Lower risk market entry strategy
5. Regional diversification provides Toll with increased long term growth options
6. Complements other Toll products
7. Provides beach-head entry into multiple global markets for other Toll businesses.
While Toll’s participation in global forwarding is relatively recent, the fundamental characteristics of the business model are akin to our network transport expertise
Toll Global Forwarding 17 Key Elements of TGF Strategy
. Business foundation built on Asia Export Trade to US, Europe and ANZ . Targeted M&A to deliver scale and capability in existing markets, extend industry sector coverage and to grow the geographic footprint . Build our product portfolio and rollout across the network . Build sales force resources , capability and effectiveness . Maintain rapid pace of IT development . Progressively improve margins through improved procurement and improved operational productivity.
Toll Global Forwarding 18 Why Asia?
Global Freight Forwarding Market 2003 – 2013 (Revenue A$ billion) . By 2013, Asia will overtake Europe and become the biggest regional freight forwarding market
. The strong growth in Asia not only fuelled by Western export market, but also by a strong intra-Asian economy
. Global Forwarding forecast market growth 2009-2013: CAGR 9.7%
Source: Transport Intelligence Toll Global Forwarding 19 Toll Global Forwarding’s Key Competitors
Estimated global forwarding revenue, A$ million: 2010
Highly fragmented market
Source: company annual reports/ websites, TGF analysis (1)DHL – Global forwarding: Air, Ocean & Others (2)K+N – Air & Ocean freight only (3)DSV – Air & Sea division only // (4)Nippon Express FY result ended March 2010 (5)Agility – Logistics unit only (6)Excluding China Forwarders
Toll Global Forwarding 20 Toll Global Forwarding’s Key Competitors
• Major key players are focused on Europe
• TGF unique opportunity lies in an Asian focus
Source: company annual reports / websites, TGF analysis ^K+N Europe, Middle East and Africa including Central Asia Toll Global Forwarding ^Panalpina Europe, Middle East and Africa including CIS 21 China will overtake US in 2016
IMF predicted: China’s economy will exceed 2010 the United States’ in 2026.
Based on PPP (Purchasing power parity), China’s GDP will rise from $11.2trillion in 2011 to $19trillion in 2016, while US’ economy will increase from $15.2trillion to $18.8trillion. 2016
Correspondingly, China’s share of global economy will ascent from 14% to 18%, while US’ share will descend to 17.7%.
Toll Global Forwarding Source: IMF World Economic Outlook 2011 April 22 Our Journey So Far Strategic Acquisitions
In FY2011 TGF has grown to an annualised revenue of c AUD1.7BN (2.0Bn at FY 10 exchange rate)
Year Acquisition HQ Trade Lane focus
2007 Toll and Patricks Australian Fwd Ops Australia Australia – Asia
2008 BALtrans Hong Kong Asia – ROW
2008 Gluck Forwarding Melbourne Asia – ANZ
2009 Express Logistic Group NZ Asia – ANZ
2009 Logistics Distribution Systems Dubai UAE in-bound and outbound to Asia and Europe
2010 Summit Logistics International US Asia to USA – Transpacific route
2010 Genesis Forwarding Group UK Global outbound
2010 WT Sea Air Group UK UK inbound from Asia
2011 SAT Albatros Dubai Sea-Air via Dubai
Source: TGF strategy
Toll Global Forwarding 24 TGF 3 Years Revenue History
Toll Global Forwarding 25 The Journey So Far
. TGF is still on the journey initiated in 2008 – we are still building . We are holding our strategic course in challenging market conditions . Growing revenue scale in line with our 2010 to 2015 strategic plan, but strong AUD impacting AUD reporting (Hong Kong dollar exchange rate in FY09 5.85 vs. current 8.51) . Excellent management team in place including key senior appointments from major competitors . Major focus on standardized IT systems rollout will begin to deliver positive productivity improvements in FY12 . While we have grown despite market conditions, we are well positioned for additional growth as economic conditions improve
TGF still tacking into a strong headwind. Making positive progress, but no opportunity yet to bring out the spinnaker.
Toll Global Forwarding 26 Looking Forward – Our Major Focus Points for FY12 and Beyond
. Extend geographic footprint – LATAM, Africa, Middle East, Sth & Central Europe . Increase sector exposure- Industrial, Military, Projects, Perishables . Maintain rapid deployment of standard freight management and finance IT platforms . Standardize systems and processes to improve productivity . Improve sales force effectiveness – quality, quantity and product . Leverage opportunity with our new SEA/AIR product . Increase mix of AFR and LCL to FCL through product development. . Optimize global procurement opportunities
Drive topline growth – fill the existing capacity Expand the geographic and industry sector business base Improve productivity / reduce cost per unit Improve margins
Toll Global Forwarding 27 Questions TOLL GLOBAL EXPRESS
Toll Investor Day - 13 May 2011 Shane O’Neill – Divisional Director, TGX Agenda
. Who we are and what we offer
. Market share and industry structure
. Strategies for growth/opportunities
. Japan – Footwork – strategy an earthquake impact
Toll Global Express 2 Toll Global Express Who we are and what we offer
Toll Holdings Limited – Investor Day 13 May 2011 3 Toll Global Express Business Units
Toll Global Express
Toll Priority Toll Toll (Incl Air Express, Toll Ipec Toll People Footwork (Japan) Fast Dnata Air Services Stream, ITC)
•Air Freight •Road Freight • Same Day metro •Internal and external •Cargo handling Express Road freight •Air charter •Local services labour hire •Passenger handling business throughout •Mailroom •Fashion •Permanent •Ramp handling Japan •DX mail •Sensitive recruitment •Print management •International •Digital solutions •Cash in transit
TGX core offering is Express freight , anywhere in the world , via any mode that matches requirement and any size. Time is the dimension that defines the offering , rather then cube and weight.
Toll Global Express 4 Toll Global Express (excl Japan) – Key Dimensions
. 5 countries (AUS, NZ, SGP, HK, CHN) . 5,000 employees + 3,000 contractors . 2010 Revenue of A$1.3 billion . 52 million consignments / jobs per year . 4,000 trucks on the road . 146 properties / depots . Use of 133 aircraft (16 owned, 33 subcontractors, 84 Virgin Australia) . 4,000 flights a week . Service every bank branch twice a day
Toll Global Express 5 Safety and our People
LTI Frequency Rate 7 Safety . A continual focus on safety has seen our trend in 6 lost time injuries continue to reduce month over month
5 . We achieved this by: . A continuation of safety leadership driven by 4 senior management . Deployment of safety strategies throughout the business 3 . We must continue to drive to a zero target for LTI’s
2 . Staff are our most important assets
1
0 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10
Toll Global Express 6 Value Proposition meets Customers Requirements
Customer Needs TGX Value Proposition •Domestic / Regional Network coverage and express freight capability •Value for money, time critical distribution of freight •Highest standard of service quality and on-time •Surety of service and multiple offerings operating performance •Size and scale provides capability to respond to increased demand and maintain service quality
•Visibility from origin purchase order through to end- •Technology: “Best of Breed” user proof of delivery •Continual investment in technology across the fleet
•Expertise in providing customised integrated •Ability to provide tailored solutions based on solutions for major customers customer needs for both traditional transport needs •Ability to leverage Toll’s end to end capability and emerging trends (Digital) •Provides capability to differentiate our offering
•An integrated Global and local network, connecting •A regional capability systems and people
Toll Global Express 7 Product Offer
Product description Maturity of offer Maturity of Market Place (e.g. existing or under development)
Domestic . Ad hoc . Metro point to point . Fixed . Existing - ANZ . Mature Courier . Taxi-truck
Domestic . Parcel /Bulk . Existing - ANZ . +1 or +2 days . Mature Express Time definite . Inefficient – Japan
Domestic . Satchel . Same day or . Existing – ANZ . Mature Express Time definite . +1 day
International . Parcel and satchel . Time definite . Opportunity . Mature Express
. Focus on . Labour hire and Perm Labour Hire transport and . Opportunity . Mature/growth placement Logistics
Value Add . Complement . Multiple offerings . Opportunity . Mature/growth Services above
Toll Global Express 8 TollToll PriorityPriority GroupGroup –– IntegratedIntegrated AustralianAustralian NetworkNetwork
Regional Network Darwin Gove Interstate Network Groote island Virgin Blue Flights Katherine
Kununurra
Derby Cairns Innisfail Broome Townsville
Port Hedland Karratha Mackay Hughenden Mt Isa
Tom Price Dysart Longreach Emerald Rockhampton Paraburdoo Barcaldine Gladstone Alice Springs Bundaberg Uluru Thangool Maryborough Gayndah
Charleville Roma Dalby Brisbane Toowoomba
Geraldton Coolangatta Lismore Moree Ballina Inverell Brewarrina Walgett Narrabri Glen Innes Bourke Coffs Harbour Armidale Kalgoorlie Coonamble Tamworth Coonabarabran Hawker Pt Macquarie Ceduna Scone Taree Broken Hill Mudgee Port Augusta Dubbo Perth Wudinna Maitland Streaky Bay Orange Whyalla Condobolin Port Pirie Parkes Bathurst Cleve Griffith Temora Cowra Sydney Mildura Hay Young Port lincon Narrandera Wagga Nowra Albany Deniliquin Adelaide Finley Wagga Swan Hill AlburyCanberra Corowa Moruya Cooma BendigoShepparton Kingston Horsham Wangaratta Merimbula Naracoorte
Millicent Hamilton Bairnsdale Mt Gambier Sale Portland Melbourne Warrnambool
Devonport Launceston
Hobart Top Customers by Industry
Financial Telco / Media / Government Pharmaceutical Retail Transportation Services Hospitality
Toll Global Express 10 Market Share / Industry Structure
Toll Holdings Limited – Investor Day 13 May 2011 11 Domestic Industry Exposure
All Customers Top 50 customers
Telco / •Mobile phone supply / delivery, DVD’s, •Services all bank branches for the major Hospitality/ banks Media •magazines Financial •Intra / Inter branch satchel service •Work on behalf of competitors, leverage Services •Scanning and imaging, print management Transportation •CIT our network assets & unique local solutions •Merchant terminal services •Interdepartment mail, DX mail, Government •Promotional material etc •Fashion, apparel Retail •Time sensitive, blood and medical supplies to •Footwear, Electrical equipment Pharmaceutical Hospitals, chemists etc 12 Domestic Market Share Comparison
Courier Road Freight Air Freight Metro – Same Day Intra – Interstate Road Express Regional – Interstate Air Express Revenue
Market Share and Concentration *Only competitors with scale demonstrated on chart Toll Global Express 13 Strategies for Growth
Toll Holdings Limited – Investor Day 13 May 2011 14 Key Strategies to Build our Business
1. Secure and grow our domestic Australian earnings and market share.
2. Yield management
3. Diversification of industry exposures via new product offerings
4. Expand International Express offering in Asia and grow revenue in region
5. Develop our people
6. Continue the focus on safety
Toll Global Express 15 Positioning for Growth: Project Unite – FMS Renewal
1. New Suite of Systems: software (packages), hardware, infrastructure.
2. Approx $70M investment, 4 year timeframe, annual (approx) “Releases”.
3. End to end transport management tool; including CRM and business intelligence
4. Status: Release 1 fully functional, Release 2 deployment begins 6th May, R3 planning has commenced
5. Benefits: Complete visibility of supply chain, enhanced customer integration, improvements in business processes and reduction in complexity and cost
6. Strategy: provides a scalable platform for growth that meets our domestic and international expansion requirements
Toll Global Express 16 Opportunities for Growth: Industry Exposure Diversification
Market Description & Customer Requirements Sizing & Prospects
Toll Global Express 17 Opportunities for Growth : Finance Industry Solution
Toll’s Industry Focus & Expertise Scanning Web Portal Digital/ Ad Hoc standard Int’l, Same Mailrooms Fixed Run Day, Overnight, Rural/Metro Off-peak Courier Services Courier Services
Cash in Transit / Print Cash Management Management Industry Solution
Merchant Scanning & Terminal Imaging Network Services Digital
Warehouse DX Mail Services Opportunities for Growth: Home Deliveries – Toll Fast and Dell
•We have been doing home deliveries for Dell over the last 8 years. •We have the capability and the network
*
Toll Global Express *VMI = Vendor managed inventory eg carry cases 19 Opportunities for Growth: Expand International Express Offering
1. Our ANZ customers increasingly want Asia Express reach through Toll, including to and from ANZ
2. Express decision making is moving outside Australia
3. The express market (cross-border and domestic) has good growth prospects in Asia
4. Express is a core competence of Toll that can be transferred to new markets
5. The role of express in customer supply chains is expected to increase
Toll Global Express 20 Current International Footprint
TGX owned Operations in: . China . Singapore . Hong Kong . Japan (Footworks)
Toll Priority + Owned DPEX Operation DPEX Network Member + Toll Priority Agent SkyNet Network Member Toll Priority and Partner – Network Hubs 21 Toll Japan - Overview and Impact of Earthquakes
Toll Holdings Limited – Investor Day 13 May 2011 22 Toll Global Express Japan – Key Dimensions
Toll Global Express Japan is an express LTL / parcel road freight business throughout Japan. It is approximately No.8. in its market place and its key dimensions are:
. 5,500 employees . 2010 Revenue (8 months) of A$510 million . 19 million consignments / jobs per year . Average 135kg per consignment . 4,500 trucks on the road
Toll Global Express 23 Toll Global Express Japan : Development
performance
INTEGRATION PHASE OPPORTUNITIES
BACKGROUND COMPLETED UNDERWAY NEAR TERM FUTURE • Top ten road • Experienced Toll • Check, weigh and • Linehaul productivity • Global forwarding express operator management team cube • PUD fleet efficiency • International in Japan • P+L responsibility • Freight and customer • Further training Express • A$800m revenue decentralised profiling • New technology • 5000 employees • Extensive property • Restructuring of • Market share growth • 88 sites and fleet sales and marketing maintenance • OHS culture program • Property portfolio • Freight damage review reduction • Fleet review and upgrade • Introduction of materials handling equipment • Fuel surcharge • Uprating
time
Toll Global Express 24 Impact of Earthquakes on Japan Business
•All Footwork Express employees are physically safe •Overall volumes and revenues have held up well •We are currently operating on the assumption that there will be no material impact on Financial results for FY11 or FY12
Earthquake, tsunami and radiation impacted area
Toll Global Express 25 Toll Global Express – Key Messages
1. Dominant profitable market position in Australia.
2. Execution of four clear strategies will ensure the Division continues to grow:
a) Focus of management on service and yield in a very competitive environment
b) Diversification of industry exposures via new product offerings allowing significant growth.
c) Expand International Express offering in Asia and grow revenue in region
d) Japan will grow in the mid term (market share and productivity gain)
Toll Global Express 26 Questions
Toll Holdings Limited – Investor Day 13 May 2011 27 TOLL DOMESTIC FORWARDING
Toll Investor Day - 13 May 2011 Paul Ebsworth – Divisional Director, TDF Toll Domestic Forwarding - Overview
Toll Domestic Forwarding focuses on full truck load (FTL) road, rail and sea freight forwarding services in Australia and New Zealand. . 2 countries . 3,000 employees . 2010 revenue of A$1.067 billion . 68 Sites . 146,000m² Warehouse capacity . Container Fleet - 15,000+
Toll Domestic Forwarding 2 Toll Domestic Forwarding Business Units
Toll Domestic Forwarding
Toll Intermodal Toll Toll Toll (Formerly SPD & ANL Bass Strait Toll New Zealand Tasmania QRX) Shipping Refrigerated
Multi modal interstate Trans Bass Strait Intrastate (Tasmania) Fully integrated Multi modal national and intrastate shipping and logistics and Interstate (Trans temperature controlled transport and logistics (Queensland) freight services. Joint Venture Bass Strait) freight supply chain services provider – provides FCL, forwarder – provides with ANL. forwarder of ambient within mainland Australia, LCL and parcel services services via rail, road and refrigerated specialising in long via rail, road and sea. and sea. products. distance. ** Services extend to ** Intrastate services include warehousing, log extend to include harvesting and cartage, warehousing and vehicle wharf cartage, fuel transport. cartage and vehicle transport.
Toll Domestic Forwarding 3 Toll Intermodal - Overview
Darwin QRX
Cairns . Rail – 21 services per week ex-Brisbane (2000 Townsville containers) NT . Toll control trains QLD
Rail Road Mackay Mount Isa
Rockhampton WA
Brisbane SA Kalgoorlie
Perth NSW
Griffith Sydney Wagga Wagga VIC Adelaide SPD
Sea Melbourne Rail Burnie Launceston Road 4 Toll Domestic Forwarding Hobart Toll Refrigerated - Overview
Darwin
Toll Refrigerated Cairns . Road and rail Townsville transport NT . Warehousing in QLD Brisbane and Sydney
Mackay Mount Isa
Rockhampton WA
Brisbane SA Kalgoorlie
Perth NSW
Griffith Sydney VIC Wagga Wagga Adelaide Rail Road Melbourne
Burnie Launceston Toll Domestic Forwarding 5 Hobart Toll Tasmania - Overview
Darwin Toll Tasmania Cairns . Tas –Dry and refrigerated freight Townsville NT . Mainland – Dry freight. QLD Refrigerated ex- Tasmania performed by Toll Refrigerated Mackay Mount Isa
Rockhampton WA
Brisbane SA Kalgoorlie
Perth NSW
Griffith Sydney Wagga Wagga VIC Adelaide
Melbourne Rail Road Burnie Launceston
Toll Domestic Forwarding Hobart 6 Toll ANL Bass Strait Shipping - Overview
Darwin Facts
Cairns . One(1) Bass Strait crossing Townsville in each direction NT per night (6 QLD nights per week) . 500 TEU per vessel Mackay Mount Isa
Rockhampton WA
Brisbane SA Kalgoorlie
Perth NSW
Griffith Sydney Wagga Wagga VIC Adelaide
Melbourne
Burnie Launceston Sea Toll Domestic Forwarding 7 Hobart Toll Domestic Forwarding Division
Darwin
Cairns
Townsville NT QLD
Mackay Mount Isa
Rockhampton WA
Brisbane SA Kalgoorlie
Perth NSW Wagga Wagga
Griffith Sydney VIC Adelaide
SPD
REF Sea Melbourne TAS Rail QRX Road Burnie Launceston SHIP 8 Toll Domestic Forwarding Hobart Toll New Zealand
Kerikeri Kaitaia Whangarei TDF Depots
Auckland
Hamilton Tauranga
Gisborne
New Plymouth Hastings Wanganui Palmerston North Masterton
Nelson Wellington Blenheim
Greymouth
Christchurch
Ashburton Timaru Oamaru
Dunedin
Toll Domestic Forwarding Invercargill 9 Safety
100
90 Lost Time Injury Frequency Rate 80 . LTIFR projected to June 2011 < 3.0
70 . 63% projected LTIFR improvement
60 compared to FY10
50 . Safety Culture Survey completed March
40 2011
30 . No Injuries - Safety Improvement Program
20 to be rolled out in FY12
10
0
Toll Domestic Forwarding 10 Non-Financial KPIs
. Rail Equipment Utilisation . Revenue Quality . Linehaul Margin – reflecting equipment utilisation/loading and linehaul sourcing/pricing . Freight mix – FTL v LTL . Delivery in Full on Time (DIFOT)
Toll Domestic Forwarding 11 Industry Structure
12 Industry Sector & Geographic Revenue Split
Resources Building & Construction 4% 19%
Manufacturing 20%
NZ Food & Retail (Discretionary) 19% 19% Logistics 3%
Aust 81%
Food & Retail (Non-Discretionary) 44%
Toll Domestic Forwarding 13 Competitive Environment
. Key competitors . Australia - Linfox, SCT, QR National, K&S, Scotts, Lindsay Bros, Rand, SeaRoad Logistics, TT Line . NZ – Mainfreight, Peter Baker
. Market size – c. $13b. Forecast to grow at 3.6% annually in the period to 2030¹.
. Market share → Market Leader @ c. 9%.
1. Australian Government – Department of Infrastructure, Transport, Regional Development and Local Government – Research Report 120 – Multimodal Interstate freight in Australia.
Toll Domestic Forwarding 14 Business Conditions
. Conditions remain generally flat; . Trading environment remains unpredictable – ability to turn off costs remains critical; . Downward pressure on rates; . Weather events impacting TDF in FY11: . Queensland Floods/Wet Season – beyond high profile floods rail infrastructure failings significant; . Cyclone Yasi – produce volumes expected to be impacted until early FY12; . Christchurch Earthquakes – impact of rebuilding process unknown.
Toll Domestic Forwarding 15 Strategic Approach
. Key strategic advantages include: . Multi modal – ability to switch mode to suit customer demand; . Terminal/depot network – 68 depots across Australia and NZ; . Linehaul Infrastructure/Buying Power: . Controller and operator of rail linehaul in Queensland and trans Bass Strait shipping linehaul; . Service agreements for rail linehaul with Pacific National in Australia and Kiwirail in NZ. Rail spend controlled in one Toll division; and . owned fleet sized at optimal level. . Compliance & Governance attractive to multinational customer base; . Cross border and cross segment capability – customers cross international borders and cross segment e.g. ambient and refrigerated services for many customers; . Long term customer relationships; . “One stop shop” in both Tasmania and NZ.
Toll Domestic Forwarding 16 Strategic Approach
. Service & Capability backed growth led by:
. Experienced Management and employees. Business Unit management empowered to make decisions; . IT systems tailored to clients - continuing to invest heavily; . Confidence in Toll brand; . Ability to handle scale; . Innovation – new equipment; and . Legal & Regulatory Compliance/Governance. . Sophistication of Offering: . Stringent management of variable costs; . Weekly reporting of financial and non-financial measures.
Toll Domestic Forwarding 17 Proven Track Record – Top 10 Customers
Top 10 Customers Intermodal Tasmania Shipping Refrigerated NZ Tenure
Customer A Yes Yes Yes Yes Yes 35+ Years – Multiple contracts
Customer B Yes Yes Yes Yes 35+ Years – Multiple contracts 1 2 Customer C Yes 15 Years - Contracted 22% 26% Customer D Yes Yes Yes 25+ Years - Contracted
Customer E Yes Yes 6 Yes Yes 25+ Years – Multiple contracts 20% Customer F Yes Yes 3 16% 25+ Years - Contracted
Customer G Yes Yes Yes 10+ Years – Multiple contracts
Customer H Yes Yes Yes Yes 25+ Years – Multiple contracts
Customer I Yes Yes 20+ Years – Multiple contracts
Customer J Yes 10+ Years – Contracted
Toll Domestic Forwarding 18 Opportunities
Toll Holdings Limited – Investor Day 13 May 2011 19 Opportunities
. Positioned to take advantage of . Customers demanding financially stable, compliant and capable service provider; . Introduction of Carbon Tax – customer focus on carbon reduction – attractiveness of rail and sea likely to result in modal shift, combined with carbon reduction initiatives underway; . Improvement in economic conditions – continued investment in Fleet, Terminals and IT capability throughout GFC; . Changing regulatory regime ie. Fatigue management; . Rising fuel costs – monthly recovery in place.
Toll Domestic Forwarding 20 Opportunities
. Operational improvements via depot and operational consolidation: . Perth depot approved for construction will consolidate four (4) depots into one (1); and . Brisbane depot approved for redevelopment will consolidate three (3) depots into one (1). . Exciting opportunities for Toll Intermodal. New growth options via selling new service offerings to existing customers. . Growth – small scale bolt on acquisitions e.g. McLaughlin Freightlines (MFL) – growth in new market. . Continual cross-selling between Toll Divisions. Growth opportunities via Toll Global Forwarding – customers requiring supply chain visibility and value add by delivery direct to store/site.
Toll Domestic Forwarding 21 Questions
22 TOLL SPECIALISED & DOMESTIC FREIGHT
Toll Investor Day - 13 May 2011 Mal Grimmond – Divisional Director, TSDF Toll Specialised & Domestic Freight Overview
Specialised & Domestic Freight provides a Less than Truckload (LTL) core market offering utilising a comprehensive national network as well as specialist offerings in Liquid Distribution and Relocations. The Division is also an internal provider of interstate linehaul services supported by Fleet workshops.
Darwin
. Revenue $ 1.4b Katherine Kununurra Cairns Innisfail Broome . Employees 2,600 Townsville Mt Isa Port Hedland Cloncurry Mackay Dampier . Operations across Australia Karratha Emerald Rockhampton 87 sites Alice Springs Carnarvon Brisbane Toowoomba Gold Coast
Geraldton
Kalgoorlie Coffs Harbour Perth Whyalla Esperance Newcastle Bunbury Port Lincoln Canberra Adelaide Wagga Wagga Sydney Albany Wollongong Ballarat Melbourne Geelong Morwell
Toll Specialised & Domestic Freight 2 Toll Specialised & Domestic Freight Business Units
Toll Specialised & Domestic Freight
Linehaul NQX Express Liquids Transitions ICS Workshops
. Time sensitive freight . Provides time . Provides national bulk . Toll Transitions . Provides a fleet of . Inventory optimisation and time certain sensitive, part load, road tanker services. manages tens of heavy vehicles tool used for demand multimodal services pallet movements, for . Services include bulk thousands of covering approx 21 forecasting and linking all capital and both ambient and cartage as well as households and million kms per inventory regional centres. temperature inventory control and workplace relocations annum. It services optimisation. . Time certain full controlled freight both a re-ordering each year both internal customers container load interstate and capability. nationally and such as Express, services by rail, road intrastate. internationally for IPEC, in2store and and sea. . Provides a full range Federal and State NQX, as well as . Provides a vast array of services through Government supplying shuttle of services for the WA, with special Agencies, the services to Auto. mining and resources focus on the mining Department of sector including: industry. Defence and the transport, . Preferred provider to Corporate Sector. consolidation, major distribution warehousing and time centres across critical deliveries. Australia.
Toll Specialised & Domestic Freight 3 Safety and Environment
Lost Time Injury Frequency Rate • Safety performance - Rolling 12 months 9 • Continued focus on safety management and
8 performance:
7 • Driver compliance via black box monitoring – speed alerts, fatigue management 6 • Incident reporting and root cause analysis 5 • Safety leadership training 4 • Environmental actions 3
2 • Introduction of new Euro 4, Euro 5 fleets
1 • Eco driving targets, diesel additives, network optimisation 0
Toll Specialised & Domestic Freight 4 Industry Structure
Toll Holdings Limited – Investor Day 13 May 2011 5 TSDF Geographic Revenue Split
Note: Excludes Toll Transitions
Toll Specialised & Domestic Freight 6 TS&DF Industry Exposure
Government • Transitions Defence/govt contracts
Industrial • Includes Toll Liquids
Retail • Food & Retail
Resources • Mining & resources
Other
Note: Excludes Linehaul and Fleet Workshops
Toll Specialised & Domestic Freight 7 Key Customers
Toll Specialised & Domestic Freight 8 Competitive Environment
Competitive strength / Name Est. Rev. Competitive strategy Positioning (A$) vulnerability
. Provides door to door express . Regional network Border Express $ 170m transport & customised logistics . IT capability . Pricing structure services . Heavy reliance on subcontractors
. Non unionised Centurion $ 110m . Offers mining services focus . Mining services focus . Low cost operator Transport . Major supplier to mining companies
. Sells full service offering and IT First Fleet $ 60m . Struggling on service levels . Warehouse & transport integration capability
. Sells full service offering and IT . Poor service levels . Alternative carrier in/out of NT Northline $ 170m capability
Followmont $ 75m . Low cost. Broad Qld coverage . Limited capacity outside Qld . Has critical mass in key Qld areas
. Strong IT capability but not for $ 800m (less than Star Track . Express freight courier palletised product . Claims to offer services across all $ 100m in Express market segments palletised revenue) . National infrastructure . Core offering is loose cartons, not pallets
$ 550m ( less than . Claims to offer services across all TNT $ 100m in . As per Star Track . As per Star Track market segments palletised revenue)
Toll Specialised & Domestic Freight 9 Less Than Full Load Market - Positioning
• Market Characteristics • Highly fragmented suppliers with a significant number of owner operators • Low Barriers to entry • Low switching cost • Scale advantage for LTL
• Toll’s Position - NQX/Express • Premium provider • Excellence in service delivery • Safety and compliance • Freight tracking capability in LTL market • Scale of Toll network & capability
Toll Specialised & Domestic Freight 10 TSDF Key Strategies to Build our Business
1. Maintain organic growth for LTL business by focus on target markets
2. Implementation of IT offering to differentiate service offering
3. Continued focus on service performance and retention of major customers on contract renewal
4. Revenue quality and cost control
5. Develop Transitions offshore growth opportunities
6. Sales pipeline focus for Liquids, and implementation of new contract wins
7. Continue the focus on safety
8. Capacity planning for growth – depots, fleet, IT etc
Toll Specialised & Domestic Freight 11 Toll Specialised & Domestic Freight – Positioning & Target Markets
Toll Holdings Limited – Investor Day 13 May 2011 12 Road Freight is Expected to Recover in Volumes & Revenues in the Near Term
The major customers for the freight industry have suffered a downturn. These industries are expected to rebound in the short term driving an increase in demand. Overall industry growth expectations Toll Perspective
. Industry is predicted to witness modest growth in . Demand will also be influenced by the expansion of store Food 2011 and relatively slow growth from 2011 to 2015 networks by ALDI, Costco and IGA
. Major retailers are increasingly dominant which affects . Demand is expected to increase steadily in the near smaller, specialist retailers. Retail future . Bunnings looking to consolidate carriers allowing for greater efficiencies at receiving stores
. The mining industry is expected to have strong . Increased activity in mining and ancillary services Mining growth in 2011-2012 . Increased focus on safety
. Demand is expected to improve as customers rebuild inventory levels . Industry is declining in many sectors Manufacturing . Manufacturing is increasingly being outsourced to China and other countries due to cost benefits
. Industry is predicted to have good growth rates in the . Industry is largely controlled by 4 top global major players Pharmaceutical near future . Requirement for freight tracking
Electronics & . Industry participants try to minimise stock to reduce risk of . Industry is predicted to have quite strong growth obsolesce, therefore require more frequent smaller Electrical rates in the near future Component deliveries suited to IPEC Toll Specialised & Domestic Freight 13 NQX Target Markets Organic Growth Potential
Market Description & Customer Requirements Sizing & Prospects
. Inbound transport services from suppliers to mine site Resources/ . Off site receivals . Dominant market share in Qld Mining . Inventory optimisation
. Primary & secondary freight to retail customers . Significant market size Retail . Customers require compliant, in full and timely delivery of service and . Good potential for growth increasingly the ability to track freight
. Significant market size Industrial . Primary & secondary freight to industrial customers . Some growth potential
. Domestic land transport for imports and exports Global . Significant market size . Customers require supply chain visibility and value add by delivery . Good potential for growth Forwarding direct to store/site rather than via a distribution centre
. New market to support construction of new facilities and ongoing . Significant market size LNG support in conjunction with Toll Resources. NQX would handle cartage . Strong growth potential of pipeline and associated equipment
Toll Specialised & Domestic Freight 14 Toll Express Target Markets Organic Growth Potential
Market Description & Customer Requirements Sizing & Prospects
. Core to Toll Express capability. Food & Retail . DC to DC store deliveries, assisted by time slot and pallet control . $ 1b plus . Existing IT capability can provide a compelling solution
. Target markets are WA and Hunter Valley . Significant market size Resources . Customers require a high level of visibility of freight and mining . Good potential for growth equipment
. Strategically significant to Toll due to the extensive network . Significant market size Regional coverage Toll provides and the value this brings to customers . Good potential for growth
. Remote project work – NSW and WA Project Services . Good potential for growth . Supply to remote indigenous communities
Toll Specialised & Domestic Freight 15 Toll Transitions Target Markets Solid Growth Potential
Market Description & Customer Requirements Sizing & Prospects
. Non core logistics/admin services. Defence . Opportunistic . Defence currently under pressure to reduce cost in all areas
. Commonwealth & State agencies . Growth prospect but depends on Government . Need transparency and good information timing of tender process
. Significant market size Corporate . Focus on services and outcome based reporting . Good potential for growth
. Expansion of current offering to overseas markets International . Good potential for growth . IT platform provides a sound starting point
Toll Specialised & Domestic Freight 16 Current Market Conditions
• Slowly improving retail sector
• Downward pressure on rates seen over the past 18 months will take a long period to recover
• Floods and weather events in Qld and WA has had operational and margin impact
• Difficult trading conditions in core LTL network business
• Concord Park acquisition has created short term complexity which delayed integration benefits now being seen
• Strong volumes in Resources
Toll Specialised & Domestic Freight 17 Questions
Toll Holdings Limited – Investor Day 13 May 2011 18 TOLL GROUP – FINANCE & IT STRATEGY
Brian Kruger – Chief Financial Officer 13 May 2011 Financial Metrics – Focussing on Return on Capital
. As Toll has diversified its business, it has become more important to focus on return on capital, not just margin management . TGR and TGF, in particular, have very different financial profiles
40 30 10
Note: Position and return frontiers are indicative only
Toll Group 2 Balance Sheet Management – A Conservative Approach
. Overall goal is to maintain investment grade quality balance sheet . Target gearing (net debt/net debt plus equity) < 40% . Liquidity target of circa A$800 million . Recent focus on: . Diversifying funding sources . Extending duration and spreading maturity profile . Matching liquidity requirements with facility headroom . Matching debt currency to asset currency . Potential change in lease accounting standards not expected to adversely effect borrowing capability, or costs
Toll Group 3 Balance Sheet – An Update
. Strong Balance Sheet position as at 31 March 2011: . Gearing (net debt/net debt plus equity) < 30% . Net debt position $991 million . $730 million headroom in existing facilities . $560 million in cash
. Debt Maturity profile as at 31 March 2011:
FY 2011 FY 2012 FY 2013+ Total $32m $1,019m $500m $1,551m
Toll Group 4 Refinancing Programme – Good progress on objectives and reinforcement of strong credit position
Phase 2 – HKD/USD Syndication . Executed 3rd May . USD 400m 3 year multi currency . Consolidates multiple bilaterals . Reduces funding margin
Phase 3 – SGD 950m Refinancing . Progressing well . Consolidates multiple facilities . Spread maturity profile
Toll Group 5 Currency Risk Management
. Our currency risk management approach is driven by 2 key objectives: . Manage the impact of foreign currency movements on Group Earnings Per Share . Limit the impact of foreign currency movements on Group gearing levels and debt covenants . Most of Toll’s businesses have revenue and costs denominated in the same currency, therefore earnings exposure is largely limited to translation of profits to A$. . Approximately 25% of Group EBIT is currently from outside Australia, with biggest exposure to Singapore dollars. . The Group currently undertakes very limited currency hedging with derivatives . Offshore investments are partially funded by debt in matching currency to mitigate balance sheet and earnings currency exposure
Toll Group 6 Capital Expenditure
. All sustaining and growth capital expenditure and leases are subject to rigorous evaluation and review process . Changes to evaluation process to incorporate more detailed sensitivity analysis and focus on after tax cash flows . Maintenance capex now $200-$250 million . Current year capex “inflated” by TOPS ($100 million) and Footwork properties that were previously subject to finance leases ($100 million). Current year spend will be approximately $500 million . Balance sheet well positioned for ongoing growth capex and targeted acquisitions
Toll Group 7 IT Strategy
. IT plays a critical role in management of complex supply chain . Toll has consistently invested in development of world class IT systems: . Appropriate mix of in-house and external . Designed to enable flexibility and scalability . Timely and cost effective . Dedicated staff of around 500 systems and IT specialists . IT function structured to: . Maximise benefit of scale - . Leverage common services from centralised function . IT specialists in business to better respond to customer/business/regionally specific requirements
Toll Group 8 Recent Investments in IT Systems
. Phase 1 of global visibility supply chain management programme . “One view” visibility across multiple partners, multiple countries and multiple time zones . Phase 1 of multi business CRM . Improved customer service . Advanced local fleet planning with optimisation technology . Enhanced image storage and workflow capability . Scalable Radio Frequency Identification (RFID) solutions to support control of high value and sensitive freight and improved warehouse efficiency . Upgrading integration and messaging platform: . Access to global flow of information . Delivery of customer specific solutions at market leading value . Maximise process automation
Toll Group 9 Finance & IT Strategy - Summary
. Ensure right financial metrics are in place and key drivers are understood . Maintain a balance sheet and funding strategy that supports growth objectives . Ensure currency and other “market price” risks are understood and prudently managed . Manage capital spending and allocation framework . Structure IT investment to ensure leading, but cost effective solutions for customer service and productivity
Toll Group 10 Questions
Toll Group 11 .11 TOLL GROUP - SUMMARY
Paul Little AO – Managing Director 13 May 2011 Toll Businesses
. As you can see, we have strong businesses, headed by great management . The Toll model is unique, providing our customers end to end multi modal logistics solutions . We remain focussed and convinced that we are addressing key financial market issues specific to Toll . Impact of the two speed economy on our key Australian businesses is evident listening to comments on current conditions . Our growth path in Global Forwarding is well laid out and progressing in line with our well articulated strategy . Footwork Express internal development is in line with expectations
Toll Group 2 Toll Growth Pathways
. Secure and organically grow our valuable Australian market position . Build global scale and yield in the high growth global forwarding market . Increase exposure to large, secure and growing resource logistics market . Leverage our Australian expertise to build a regional global express network . Grow market leading contract logistics offer in target geographies and market segments . Leverage Group scale to build competitive advantage
Toll Group 3 CEO Succession
. Process is continuing in line with announced timeline . Orderly plan ensures the company maintains strong existing relationships . Transition early 2012
Toll Group 4 Outlook – Momentum Builds
. Best positioned to take advantage of improvement in Australian economy . Two speed economy . Banking and government sectors remain solid . Toll Global Forwarding and Toll Global Logistics to build further off existing base . Will result in improving returns . Strategic growth opportunities across Asia . Operational improvements at Footwork Express gaining traction – medium term impact of earthquake being assessed but not material . Exciting opportunities for Toll Global Resources across Australia and offshore . Increased business diversity provides both leverage and balance
Toll Group 5 Questions
.Toll Holdings Limited – Investor Day 13 May 2011 .6 Disclaimer
This presentation includes “forward-looking statements.” These can be identified by words such as “may”, “should”, “anticipate”, “believe”, “intend”, “estimate” and “expect”. Statements which are not based on historic or current facts may be forward-looking statements.
Forward-looking statements are based on assumptions regarding Toll’s financial position, business strategies, plans and objectives of management for future operations and development and the environment in which Toll will operate.
Forward-looking statements are based on current views, expectations and beliefs as at the date they are expressed and which are subject to various risks and uncertainties. Actual results, performance or achievements of Toll could be materially different from those expressed in, or implied by, these forward-looking statements. The forward-looking statements contained in this presentation are not guarantees or assurances of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Toll, which may cause the actual results, performance or achievements of Toll to differ materially from those expressed or implied by the forward-looking statements. For example, the factors that are likely to affect the results of Toll include general economic conditions in Australia and Globally; exchange rates; competition in the markets in which Toll does and will operate; weather and climate conditions; and the inherent regulatory risks in the businesses of Toll. The forward-looking statements contained in this presentation should not be taken as implying that the assumptions on which the projections have been prepared are correct or exhaustive.
Toll disclaims any responsibility for the accuracy or completeness of any forward-looking statement. Toll disclaims any responsibility to update or revise any forward-looking statement to reflect any change in Toll’s financial condition, status or affairs or any change in the events, conditions or circumstances on which a statement is based, except as required by law.
The projections or forecasts included in this presentation have not been audited, examined or otherwise reviewed by the independent auditors of Toll. Unless otherwise stated, all amounts are based on A-IFRS and are in Australian Dollars. Certain figures may be subject to rounding differences. Any market share information in this presentation is based on management estimates based on internally available information unless otherwise indicated.
You must not place undue reliance on these forward-looking statements.
This presentation is not an offer or invitation for subscription or purchase of, or a recommendation of securities. The securities referred to in these materials have not been and will not be registered under the United States Securities Act of 1933 (as amended) and may notbe offered or sold in the United States absent registration or an exemption from registration.
Toll Group 7 Toll Holdings Limited – Investor Day 13 May 2011 7