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Chairman & CEO's Message

We are pleased to deliver the Australian Rail Track Corporation’s Annual Report for 2019-20.

It has been an extraordinary year – a year of solid progress for ARTC, but also a year of immense challenges for our company and our nation.

In February, the tragic train derailment near the Victorian town of Wallan devastated the rail industry. Our thoughts remain with the family and friends of train driver John Kennedy and pilot Sam Meintanis who sadly lost their lives, and the many other people so deeply impacted by this terrible event.

We also faced one of the most severe bushfire crises in Australia’s history, which had far-reaching impacts across local communities, regional landscapes and wildlife throughout the country. Our rail network was seriously impacted from the north coast of NSW to the Nullarbor, but thanks to the outstanding efforts of our hard-working team, we ensured that our network operations continued for our customers and the Australian public.

Similarly, we remained strong in the face of the unprecedented disruption caused by the coronavirus pandemic. Rarely has the criticality of our country’s supply lines been greater, but once again our people worked tirelessly to maintain our network operations and ensure the continued movement of freight to keep shelves stocked for Australian consumers.

As part of our COVID-19 response, we worked closely with government and health authorities to determine and adhere to preventative measures, while navigating ever-changing travel restrictions and border closure arrangements in order to keep the nation’s supply chain intact.

Indeed, we owe a huge debt of gratitude to our people for their outstanding efforts throughout the year. Due to their commitment, professionalism and spirit, we managed to reduce our operating costs which contributed to ARTC achieving its operating profit target* – a significant feat in the face of one of the worst global economic downturns in history.

Notwithstanding the resilience the company has shown to the impacts of COVID-19, our experience from previous economic shocks is that the volume of freight will likely be impacted in the short to medium term. Consequently, we have adjusted our growth expectations accordingly, which has resulted in impairment expense in our Interstate business unit.

As one of the largest freight rail network owners in Australia, ARTC continued to review, develop and enhance our organisational capabilities throughout the 2019-20 financial year. We worked and collaborated with our customers and the local communities in which we operate to explore new opportunities to increase freight on rail, create new jobs and improve productivity.

Significantly, our ambition to keep modernising our network and invest in our rail infrastructure remained as strong as ever.

During the year, we made substantial progress on Inland Rail – one of Australia’s most significant infrastructure projects since the construction of the Snowy Hydro scheme. Construction on the Parkes to Narromine section is almost complete, with all other major projects along the alignment continuing to progress through planning and approvals processes towards further construction. To that end, we remain committed to ensuring we deliver Inland Rail as efficiently as possible and with the utmost care for people in communities along the alignment.

This year also saw ARTC continue to innovate to increase the efficiency of our operations through new technologies and systems. For example, we progressed our Advanced Train Management System (ATMS), which will be a game-changer for the rail industry by vastly increasing capacity, operational flexibility, safety and system reliability. Similarly, we continued to integrate our ARTC Network Control Optimisation (ANCO) initiative, including across our Hunter Valley network to make more efficient use of available track and train assets, reduce transit time and allow customers to increase their contracted tonnage.

So, we look ahead to 2020-21 with optimism, although we know there are more challenges ahead as COVID-19 continues to cast a shadow over the global economy.

We will maintain our uncompromising emphasis on safety and continue to be guided by our No Harm value to help ensure a safe workplace for our people, and a safe network for our customers and the community. As part of this, we will commence implementation of a new Safe Work Improvement Program (2020-2023), which will form a significant part of our refreshed Pathway to Zero Harm safety strategy to further improve our safety culture and processes.

Further, we will build on the wide range of projects and initiatives we have delivered over the past year and continue to strive to improve Australia’s productivity by making rail the mode of choice in the national logistics chain.

In closing, we want to thank John Fullerton who during the year retired as ARTC CEO and Managing Director. John has been a true champion of the rail industry. Unyielding in his efforts to promote the value of rail and the transport supply chains to the national economy throughout his 40-year career, John’s knowledge and guidance will be greatly missed, but we wish him good health and every happiness in the future.

We also take this opportunity to thank the ARTC Board, management team and our entire national workforce for their exceptional efforts during 2019-20, as well as our Shareholder for its ongoing support of the role we play in delivering essential transport services to the people and businesses of Australia.

Regards,

The Hon. Warren Truss AC Chairman & Mark Campbell CEO and Managing Director

*Note: Operating profit is defined as earnings before interest, tax, depreciation, amortisation and impairment (EBITDAI) excluding impacts on earnings from expenditure related to ARTC’s major infrastructure works program and grant revenue.