Qube Holdings Limited (QUB) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to Qube Holding Limited Full Year Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Maurice James, Managing Director. Please go ahead, sir.

Thanks very much, and welcome, everyone, to the call this morning. Online with me today, as usual, Paul Lewis, our CFO. We've also got Paul Digney, our Chief Operating Officer, has joined in the call today. Paul has had a massive role in the last 6 months, particularly with respect to COVID, and I'm sure there'll be a lot of interest around what we've done in that space. And so Paul has joined us today. I think -- look, we've had several conversations in the last 6 months or so with our half year results in February, equity raising in May and the Woolworths announcement in June. So I'll try and keep the presentation focused, and we'll move reasonably quickly through our results and our underlying businesses, talk a little bit about COVID-19, Moorebank and Patrick, I think, are the key areas that area will have an interest in. Obviously, the results are self-explanatory in the pack, and I'm sure you've got all the access to that. For us, we felt it was a sound result for FY '20 in light of considerable challenges that everybody is aware of that started with late in the first half, a slowing economy, then into the second half where we had bushfires, floods and then obviously, the pandemic and the COVID-19 that -- for us. So we've tried to package it up to give you a little bit more detail around those impacts. I think that's the interest of the market at the moment. And with our business mix, it's a little challenging to estimate the impact of COVID across all the various activities and all the different sites. But at the macro level, we have estimated that COVID had an impact on our income around $130 million across the business and at the NPAT level around $21 million impact. I think for us, the results really continues to demonstrate the strength of our diversification strategy and, to a degree, that helped to mitigate the impacts of COVID-19. I will, upfront, just call out the decline in statutory revenue is, in earnings, is principally around property revaluations in the prior year. We had $155.5 million of fair value gain on the property investments of Qube compared to $45-odd million this year. So that obviously has a big impact on statutory results. I think if I could just really start to talk a little bit about the business and the underlying business. As you're aware, the group has been successful with a couple of major contracts. And during FY '20, the Shell contract, the BlueScope Steel contract, that one doesn't start until January '22, but we're in the process of acquiring equipment like locomotives and wagons for that. And we also benefited from some of the acquisitions in FY '19, LCR in particular. And the acquisition of Chalmers and NFA in New Zealand in FY '20. So some of those acquisitions and investments in the Qube business has also helped to mitigate the impact of COVID and the slowing economy, and it really has been challenging for us to try and split that impact between the slowing economy and the COVID impact, and I'll talk a little bit more about that later. Obviously, everyone is well aware of the Moorebank status to date and the recent announcement around the 2 Woolworths agreements and preparatory works for those facilities are well underway. And where we meet the time lines, we had to hand over the first pad for Woolworths in September this year and then the remaining pad by the end of the year. I think everyone's also well aware of the Moorebank monetization process, not a lot to talk about today. Second round bids just finished late last week. We were pleased with the high quality of the bids and the range of offers. Obviously, there's a fair bit of work to work through that, and our Board hasn't had the benefit of having been briefed on that at this stage. But obviously, we did separate the Minto property, and that's just waiting for the approval through Charter Hall for that to complete, and we expect that this month at the macro level. Obviously, well aware of the entitlement offer that we ran in May and also Paul Lewis and his team, establishing an additional $500 million in bank facilities during the period. So all in all, we think it was a sound result. The Board decided late yesterday to declare a dividend of $0.023. So bringing the annual dividend to $0.052, noting the difference between last year and last year included that special $0.01 dividend as well. So look, in the interest of time, I'd just like to flick through the presentation pack. It's probably the quickest rate to look at it at our underlying business. On Page 5 of the pack and 6, you'll see the impacts there or the changes from FY '19 to '20. In summary, I think we had really good volumes through our bulk business, oil and gas businesses, that we really had minimal impacts from the COVID pandemic. So that really, those businesses continued as normal. As I've touched on earlier, we got the benefit of some acquisitions, obviously, some significant cost savings and some of the rental streams that's starting to flow into Moorebank albeit small at this stage compared to the total project. But that were the positives, and obviously, the weaknesses came about with decline in container volumes, a significant decline in automotive motor vehicles, et cetera, and imports. They affect the different parts of our business containers across Patrick and Qube logistics and obviously, cars across AAT and our Ports business and into our interest in Prixcar. So those are the areas most affected -- we did have some impact from COVID in our forestry business in New Zealand where the forest were shut by the government for 3 -- for over 3 weeks, so a small impact there. And there was a little bit of impact linked with the motor vehicles and break bulk cargoes that happen through AAT as well. So all in all, I think, had it not be as we called out for COVID, we would have expected to deliver increased earnings in FY '21 compared to FY -- sorry, in FY '20 compared to FY '19. But obviously, COVID had an impact. I think I touched on COVID at $130 million of revenue and an NPAT level of $21 million impact is really where we saw that impact. We haven't attempted to quantify the impact within Patrick. Very, very challenging and difficult to do that to try and identify that split between a slowing economy versus COVID impacts, but I'll talk a bit more about Patrick in a few moments. Just turning to Slide 7. We've tried to articulate there in a flow chart. The estimated impact on our FY '20 results -- underlying results from COVID. Obviously, lower revenue goes straight to an EBIT impact of $30 million or thereabouts. We've estimated that across the business, we had additional costs in the order of $7.5 million. This was really the program I touched on where Paul Digney, our Chief Operating Officer, took control of all of the activities associated with COVID right across our business. We had a strategic group that I sat in every week with Paul. Paul and his team implemented all the various initiatives across the country. And as you can imagine, that's a huge task with state government policies, commonwealth government policies, understanding the implications and then having to implement in workplaces, particularly where some of them are heavily industrialized. There's a few challenges through the group, but pleased to say that we've been very, very comfortable with the efforts of Paul and his team in delivering that. Those additional costs that I touched on at $7.5 million really relate to things like work practice changes, social distancing rules, cleaning where we've had to do deep plans, introduction of all the cleaning and hygiene standards across our businesses to also where we've needed to change rostering arrangements or web practices. An example there is in our Ports business where we might have had multiple gangs coming on to a shift exchanging with multiple gangs coming off a shift where we stage starts of shifts where we've kept getting separately, separate within the workplace, put portable huts rather than mass rooms for each individual gang, those sorts of things. And those costs have been estimated to be in the order of $7.5 million, and we expect to see the majority of those costs continuing into FY '21 where we face the challenges of COVID-19. The second area is about $15 million at the underlying level. That's noncash items, where we've taken additional provisions, some doubtful debt provisions of $6 million in the event that some of our customers have challenges there. It's pleasing to say we're not seeing much of that at this stage, and we are being just cautious around how long this COVID-19 last and the impact it might have on some of their customers, particularly the smaller ones rather than the larger substantial customers that we have where there's a strong credit risk. The balance of that $15 million is around other noncash, where we've done some asset write-downs, where we've seen parts of our assets and activities impacted by COVID. There, the impacts, I think, on the positive side, in the order of $10.5 million of cost savings that Paul and his team and the group went through that covers everything from the Board of Directors accepting a 50% pay cut from April through to June. Management also moving right across the board to a 4-day week either by taking leave without pay or annual leave. It is fair to say that all management continued to work 5, 6, 7 days a week despite that, but some of the benefits of where we've been able to get some lease savings across the business. So those cost estimates, we estimate around $10.5 million. Some of the lease benefits may flow into '21, but the majority of those cost benefits won't flow into '21 where management has gone back to normal remuneration on a 5-day a week basis. We did benefit from JobKeeper that obviously helped us to the tune of around $13.5 million. This was on the basis of activities principally in our Ports business in regional ports where volumes have been significantly impacted. And there was concessions allowed by the ATO and Treasury, where there would be significant impacts. They are predominantly around, as I said, regional ports, where if it had not been for JobKeeper, we would inflame more than likely with the decline in volumes being greater than 50% and revenue, greater than 50% being forced into a position of having to shut down those operations and stand down employees. So it's fair to say that, that was recognized as an impact on regional communities. And through the ATO and Treasury, we were able to secure the JobKeeper package for those groups of employees in the group. And then finally, the $8.6 million is really the net tax savings of COVID. So all in all, I would say, from a COVID perspective, our priority was around protection and health and safety for our people first and utmost. Secondly, the impact on our customers. And thirdly, obviously, mitigating the financial impact on Qube as we go forward. It's fair to say, to date, we've had about a handful of COVID-positive employees across our entire group. None of those positives have been workplace transmissions at all. We have been extensive testing, even bought external testing in, in Melbourne to test our workforce a couple of weeks ago. We did 179 tests during a whole day, and there was 0 positives out of that testing regime. So we've been very fortunate there, and that's been through the hard work, as I've touched on before. And Paul and the team will begin the team to make sure that we're protected. And in fact, Department of Health inspections on our workplace has given us some very positive feedback around the implementation of policies and procedures that we've done within Qube. So that was very pleasing. I'll just move on now quickly. I won't spend too much time on the pie charts, probably moving to Slide 9, the sort of calling out major changes in the increasing logistics income and revenue in Queensland, in particular, on the back of the LCR acquisition and some infrastructure projects that were Queensland-based. Most of those speak for the sales. Victoria has kept pace predominantly with prior year around the new Altona facility, the integration of Chalmers into our business in Melbourne, et cetera. So that's where the decline in New South Wales has had minimal impact from LCR acquisition and the continuation of the drought. On Slide 10, I think probably a bit to call out, we always like to call out logistics. Top 10 customers represents about 13% of our operating division revenue. And in the Ports & Bulk space, the top 10 customers represent about 18%. In Queensland, the pie charts there, for yourselves to have a look at, again, Queensland and Western Australia with the infrastructure projects, the Shell contract, the LCR acquisition and New Zealand was really the NFA acquisition with the negative from COVID in -- particularly the ISO operations in the forestry area. I won't spend any more time on safety. The commitment to safety is super strong in Qube, as you're all aware, and we continue to see improvements in KPIs and continue to drive those policies and procedures, the lead indicators, if you like, to ensure that the lead indicators that you see here are still improving within the business. There's a comment there around sustainability. We expect our sustainability report to be probably released in the next week. There's still some -- a little bit of work going on in regard to that, but continue our commitment to sustainability, emissions controls, et cetera, et cetera. On Slide 12, I won't spend any time there, but Paul Digney also heads, and I sit on a group innovation committee where we've been focusing some of our developments around innovative use of new technology in the workplace. We would have probably in the order of 35 projects identified from early-stage to advanced stages of implementation across the group. This has really been designed to drive improvements in our operating performance, but also deliver customer benefits and improve safety. A couple of photographs that we tried to show you in the pack, the one with the log is something we've developed internally. Manually, we used to have to ask employees to get up on the truck and measure the diameters of the logs for customers. Now we've developed automated scanning equipment. We've also developed automated remote control front-end loaders or in the holds of ships, et cetera. So a lot of work happening there. We're continuing to invest. We're obviously watching very closely disruptors and the impacts that they may or may not have in our business and through that Group Innovation Committee, where we've got a really strong focus on continuing to work in those areas. In regard to Moorebank, I think we've spent a lot of time discussing Moorebank over the last 6 months around the process is really, as I said, no more update to give on the monetization process. We talked a lot about it at Woolworths -- at the Woolworths briefing. Warehouse 3 and 4 will contribute in FY '21 and Warehouse 5 is on track for completion at the end of the year for the Qube Logistics facility. What we have done on Slide 15 is provide an update on forecast CapEx for the project. There has been a significant increase in that Capex, which we now forecast around $1.1 billion to $1.2 billion, which excludes additional warehouses as we strike deals for agreement to lease with third parties. The majority of that increase, you can see in the water flow document there on Slide 15, relates to the Woolworths contract in the order of $420 million to $460 million. There's some additional costs around IMEX automation. Some of that is external to IMEX and additional costs associated with delivering automated equipment to the warehouse sites, scope changes on that and internally in the warehouse -- in the IMEX terminal. I think it's fair to say that the IMEX development and the interface to the terminals is a world first solution for this. Kalmar, the supplier, are very, very committed to delivering this. And I think it's fair to say that like all development projects, we have had a bit of scope group and additional costs, particularly in the IT space for that IMEX terminal. And the last group is really $90 million to $140 million around other scope changes, the inclusion of the Moorebank Avenue works, which was the subject of the arbitration dispute with the Moorebank Intermodal Company. Obviously, we're trying to minimize the cost we spend on those roadworks, but that's the update there in the context of CapEx. Moving quickly to Slide 17, and Patrick, just to talk about Patrick's for a moment. Look, we think that was an overall sound result given the impact of COVID and slowing economy on Patrick's. You can see there, we -- Patrick's revenues generated from lifts, not TEUs. The market often talks about TEUs because the port authorities published that in TEU terms. But a 4.9% decline in the market in FY '20 compared to '19, and Patrick volumes down 4.9%, which reflects the fact that we predominantly held market share around that 45% level. You can see a big difference between first half, second half for Patrick's and the market. So a decline of 5.3% on a full second half basis compared to prior year, probably not as much of a decline as we thought a few months ago and as we've been talking to most of you all about container volumes and the impact of COVID. For Patrick, though, we had a difference in first half, second half, where market share grew to about 47% in the first half and then decline back to the average 45% in the second half. That's really a result of some of those contracts and consortiums that were restructured and we -- where the balls fell in respect to Patrick volume and competitor volumes, but as I said, overall, maintained on an annual basis, that 45% market share. It is pleasing to sort of note in that respect to Patrick's is that Patrick has extended or renewed contracts and the contracts that did win out of that rationalization where it's too big customer that has been extended out to the end of '23, and we don't have any contract renewals or expiries in financial year '21. So we have finally got to the point of a bit of stability in the market as we see it at this stage. I think on Patrick, I'll just make the comment that -- and we'll touch on it a little bit later that container volumes have been a little bit stronger than expected in July. I think most of you are aware, our June volumes we're a little bit better than expected. July has been a bit better than expected. Our best estimate is really 1 to 2 months ahead, where we're getting feedback from shipping lines through Patrick's around volume, particularly import volumes from China where, the last couple of months, the feedback has been that there's strong volumes hitting southbound some vessels rolling cargo, which means they can't take it this week, they'd put it on a ship next week. And a little bit of upsizing of vessels from sort of 4,500 TEU vessels up to 5,500, 6,000 TEU vessels as a result of the -- ahead of expectation volumes heading Southbound. Most of you will sort of ask the question that out, why do we think volumes have been a little bit stronger than expected? Very difficult for us to estimate, sort of putting together information around the market suggests that, obviously, one factor is that quite a lot of freight was coming in the valley of aircraft, and there's very little airfreight coming into Australia. So that's strengthen sea freight. We have seen stronger-than-expected online retail sales generating imports. We anecdotally note that comments around the fact that Australians haven't been holidaying this winter into Europe, and therefore, renovating houses and having holidays in Australia. Therefore, spending money and all of those things, no doubt, contribute to volumes. And then the other factor is just retailers trying to forecast what the upcoming Christmas, New Year sales and special sales events are likely to have. And I think just sort of not direct info for me, but just reading articles around retailers being conservative, and therefore, probably tending to ensure they have stock in place rather than not having stock is probably rounding out why container volumes certainly, at the moment, have been a little bit stronger than expected. In regard to Patrick, just on developments there, the automated rail interface is progressing well. Equipments erected there already, and we expect that Phase 1 to be completed by the end of the calendar year. Similarly around finalization, there's been some delays around finalizations of the lease agreement in Fremantle and Melbourne with the on-dock rail. Recent announcement there, they are progressing well. The conversion to the new operating system has also been implemented and completed in Melbourne and Fremantle. We've now done it in Sydney. We're in that first month of implementation in Sydney. So that's progressing well. Changing over systems can always be challenging, but so far, so good with that at Patrick and obviously, the investment in new cranes and the like continuing. So I think that's a very quick overview. Happy to hand over to Paul just to sort of run through some of the key financials. Paul?

Great. Thanks, Maurice, and good morning, everyone. Turning to Slide 18, our statutory results. I'll just spend a few minutes just talking through the key differences between the statutory results and the underlying results as well as covering off some of the reasons why the statutory results for FY '20 are materially lower than the prior year. There is no question. The largest reason is, as Maurice touched on, the prior year included a very large fair value gain on the investment properties. The largest component of which related to Moorebank in the current period of the fair value gain. There's a reasonable portion, around $39 million related to Minto properties based on the agreed transaction with Charter Hall, but only a modest game relating to Moorebank. And the main reason for that is, while the underlying growth drivers of Moorebank has been there in terms of tightening cap rates, increase in the value of undeveloped land, particularly quality industrial sites for the logistics angle, and a number of you probably seen the press recently, that is a very in-demand area of the market at the moment. They were positive for the value. Positive valuation outcomes were also, therefore, signed lease agreements with tenants like Ceasarstone and more importantly, Woolworths. So that increased the overall gross value of Moorebank, but some of the cost increases that Maurice alluded to are taking into account in the fair value assessment. And hence, the additional costs offset the value increase. And that's the main reason why there's a much larger increase last year than this year. The other key difference between the statutory results and the underlying results as well as between this financial year and last financial year is the impact of AASB 16 lease accounting, which commenced this financial year. And as noted, that reduced our statutory results by around $26 million at the NPAT level, and that didn't apply last financial year. Beyond that, the main adjustments are similar ones to which we've done in prior periods. And that's things like mark-to-market on our interest rate hedges, given we don't hedge account, standing deals on acquisitions and various salary accounting adjustments. Turning to Slide 19, underlying results. Look, Maurice has covered that in some detail. I'll be fairly brief, but it really is a period of 2 halves. First half, despite some headwinds, already evident in vehicles, royal commodities and containers. We were able to generate some reasonable growth despite those headwinds, but the combination of bushfires, floods and then COVID just impacted the second half results. We think the result was very sound, given that environment, and it did benefit from the full year contribution of LCR, [ par ] period of Chalmers, including synergies as well as the new contracts that Maurice talked about. It's worth noting that although they're not in the underlying results, there are a number of very positive value-accretive and cash flow positive events that happened during the period. And 2 that are worth noting, with the Chalmers acquisition, we paid around $55.4 million for the acquisition. And within a short time of completing that acquisition, we sold freehold land acquired as part of that for -- which is about $65 million. So more than we take for the entire company. And we're able to do that by quickly integrating the Melbourne operations into Qube logistics site, thereby, continuing to generate the synergies in the underlying operating earnings by being able to sell that site. So Qube growth cash was very, very positive from a value perspective, but the accounting requirements, because we sold it so soon after the acquisition, it doesn't get reflected in statutory or underlying earnings. A much smaller example, but a similar positive outcome, our BOMC facility in Bintan, we've been developing for the past few years. That facility has been generating operating losses that have been in our underlying results as it ramps up. In the period, we sold a minority interest in that facility for approximately a $5 million economic gain, which was received in cash. But again, because we control and consolidate that asset, both before and after that transaction, that economic gain is not reflected in our underlying results. So both those transactions generate -- illustrate some of the value that's being created that's not necessarily in the underlying results and the relevant considerations that the Board took into account in determining the appropriate dividend paid that I'll talk about shortly. So look, overall, we spent a lot of time, particularly when COVID first started ramping up, looking our cost base, making sure the business was in a very sound position to deal with, whatever eventuated whether there was a recovery when things got worse or whether they continue along that track. So we reduced costs where we could. We increased the variability of the cost base where we could, and we think we're really well positioned to deal with whatever the future holds in that -- given COVID and then what may happen. Reflecting all those factors, as Maurice mentioned, the Board determined to pay a final fully franked dividend of $0.023 per share. It is lower than the prior comparable period, reflecting the fact that underlying earnings were down, and there is uncertainty about the future. But we think -- and the Board's view is it's important to reward shareholders for the positive cash flow we're generating, the fact that acute does have a high amount of franking credits and we've got a very strong business. As part of that consideration, the Board has reintroduced the discount on the DRP to 2.5% and in order to maximize liquidity to make sure we're in its strongest position to take advantage of some of the acquisition and growth opportunities we think will emerge. The DRP has been fully underwritten for this period. Turning to Slide 20, CapEx. There was another large amount of CapEx spend in the period. Just over $0.5 billion, and that's net of around $84 million in asset sales, the largest component of which was the Chalmers' land that I mentioned, and $43 million of that was script that was used for the Chalmers acquisition. The biggest component, as you'll see from the bar chart was Moorebank, around $322 million, which included precinct infrastructure, development of some of the warehousing as well as the IMEX rail terminal. Maintenance CapEx was also quite significant in the period to just under $100 million to make sure that our equipment continues to be reliable and very efficient. Beyond that, we started spending on the BlueScope locomotives as well as other assets and equipment to support the contracts, including the Shell contract and the BHP Nickel West contract as well as cranes and other equipment for ISO, again, to generate productivity and efficiency improvements. As you'd be aware, we raised the capital and the entitlement offer really looking at acquisitions. There are a number of acquisitions always under consideration, nothing material, but we'll continue to be very disciplined in our approach, focus on things within our core strategy and the economics will have to stack up. As you'll see, we've guided to indicative CapEx net for FY '21 of around $0.5 billion again, that excludes any acquisitions. Again, we'd expect Moorebank to be the largest component of that in the order of 50% of the total. Maintenance CapEx is also expected to be significant, probably less than this year, probably in the order of $80-odd million, but again, that will depend on utilization activity. And then other further CapEx on ISO, et cetera. As always, the actual CapEx could be higher or lower because it will depend on opportunities. And that indicative guidance for Moorebank does not take into account any possible outcome of the monetization process. Turning to balance sheet and funding on Slide 21. Again, it was another busy period on the funding front. As Maurice mentioned, earlier in the period, we put in place $300 million bridge facilities just to provide additional capacity while we were pursuing the monetization process. And then when COVID started impacting, we reached out to our banks and established another $200 million in term debt facilities just to provide additional buffer, given the uncertainty at that time. In May, we raised $0.5 billion through the entitlement offer in order to position as well to make accretive growth acquisitions, and we also repaid $100 million of the bridge facilities. And we do expect when the Minto property sale settles in September to apply those proceeds to repay the remaining bridge facilities, which, as you can see from the bar chart, the only maturities we have prior to FY '23. So we ended the period in a very strong financial position, liquidity being cash and available undrawn debt facilities of over $1 billion. Leverage below the bottom end to our target range at 26% compared to the range of 30% to 40% and substantial headroom to our covenants and a weighted average debt maturity of 3.6 years. So we are very well positioned to weather whatever COVID throws at us and to continue to make suitable accretive CapEx where possible. Turning to Slide 22, the cash flow chart. Again, just to highlight the quality of the earnings with very strong cash flow generation in the period. As Maurice mentioned, we haven't had any significant debtor collection issues due to COVID-19, although we do remain very vigilant. And as noted, we have increased our loss allowance provision, our doubtful debt provision effectively to reflect the challenging environment, which we think may impact some of our customers in the future, and we'll continue to work very closely with our customer base to try and minimize the impact on their operations. With that, I'll hand back to Maurice to talk about the outlook.

Thanks, Paul. And in terms of the outlook, I think it's fair to say that we are cautious. We have limited visibility around near-term volumes, as I've touched on, and the best source of that is through Patrick's and shipping lines, but also talking to our Qube customers around their expectations going forward. So with that, we do expect there'll be, at this point, generally weaker conditions through FY '21 compared to FY '20, and therefore, we do expect that volumes in several markets will decline in FY '21 compared to the total levels in FY '20, noting that COVID really was second half FY '20 impact. Having said that, as I touched on earlier, some areas like the container volumes in July were stronger than expected and August is looking similar, slightly ahead of expectations. So for us, our underlying earnings will largely depend on volumes through our facilities and through our businesses and the duration of COVID-19. And associated economic impacts are very, very challenging for us to be specific because we don't have views out beyond. I think last time we spoke, we talked about risks associated with the JobKeeper finishing in September and what that might mean for unemployment, and therefore, consumption. But that now appears to be addressed through the second stage of JobKeeper. So a high degree of uncertainty, I think, for everybody, and we're no different. But having said that, I think Qube continues, as Paul touched on. With respect to our financial position, we continue to have, obviously, a very diversified portfolio of operations that helps to mitigate where some parts of our markets won't be affected. But also, we've positioned ourselves really well. We understand where we can pull the levers around further cost reductions in our business. We have new revenue opportunities, and we have the potentials for acquisitions. So in summary, we feel we're very well positioned. In our key markets to when volumes return to normal, whatever that is, that we will continue to deliver earnings growth in the long term. So on that note, I'm more than happy to hand over and move into question time. Thanks very much.

[Operator Instructions] Our first question comes from Anthony Moulder with Jefferies.

Just if I can start with the Moorebank monetization process, I appreciate, Maurice, you've talked about this at length, but I'm still not clear exactly as to what is being sold. Can you talk to exactly what it is that made a bid on the second round? Is it the warehouse trust, the land trust as well as the IMEX terminals, please?

Yes. Look, Anthony, the second round bids were really a follow-up from first round, noting that we've gone into COVID and markets have changed. So we shortlisted from the first group down to a smaller group. We were then asked in this process to revisit the valuation for 100%. That's a valuation only, so that gives us comparables. And then what we've done is put suggested structures where, if you like, partnering options for specifically around warehouse trust. That's where, Anthony, that you would appreciate the major values around that. And so the next stage will roll back in a shorter list and discussions around terminals and interest in terminals, structural options relating to terminals in a complete package.

So it's still a bit of a -- I appreciate the warehouse trust is the key part of it, but it sounds like you're open to selling parts of the terminal as well. Is that a sticking point for some people that are in the second round?

I think it's fair to say that parties have different levels of appetite for the terminals, some strong, very strong, and we just need to work through that, Anthony. Look, I think I'll probably just answer this by saying we've approached this, as we've said before, very much with an open book approach to sort of what's right for a party coming in, what's right for Qube. And ultimately, we've said, unless it delivers significant value for Qube shareholders, we reserve the right to not do anything.

I completely understand that. It's just been trying to get my head around exactly what's on the sale process, I guess. And it sounds like, in all of these, it's just the varying degrees, but I try to understand that your job is to maximize returns to the shareholders. I'm not saying you're not. I'm just...

No, no, no.

Exactly what has been sold or not. Sure. The Moorebank, the Moorebank Avenue CapEx, I thought was part of the federal government's responsibility. What changed as far as their agreement with Nick that sees you pay for some of that?

The Moorebank Avenue works was -- there's 2 components to it. There's the existing Moorebank Avenue upgrade and then there's the relocation of part of that around the precinct. The relocation has always been MIC funded. The Moorebank Avenue upgrade works was, in our view, more MIC-funded works. What happens through the planning process was -- and the approvals process is that RMS insisted on us upgrading the existing Moorebank Avenue down to roughly the entry into the IMEX terminal. And the dispute that we had with MIC was over the section of upgrade from the point at which it -- if you're coming off the M5 heading South, the point at which you would turn left and go around the relocated Moorebank Avenue around the site. From that point down to the IMEX was the dispute with MIC, and we went to arbitration, and we weren't successful in that arbitration. We believed it was a MIC cost, I believed it was a Qube cost because it was inside. If you like the entire precinct, we had a different view on that in the arbitration, but we weren't successful. So that upgrade works has been, if you like, part of the planning process where, as an internal road, we would only have built a 2-lane road into the IMEX, but RMS has insisted on a 4-lane road down there, essentially, on the basis that there was no certainty that Moorebank Avenue would be relocated around the precinct because it has to go through a separate planning process.

Right, but it has to effectively. Actually, it will be. A question for Paul, if I could. The $30 million of EBIT, you've called out on the loss, the $135 million of revenue. Is -- that was your way to think about the incremental earnings that you would hope, obviously, to replace, but also looking forward, that sort of high margin is the incremental value that the business can generate from the growth going forward.

Yes. Look, indicatively, as we've always said, the actual earnings depends on the activity. So on those activities, we estimate were impacted by COVID, those were the earnings. So on the like-for-like, that would be the expectation. But also depend on where the additional revenue comes to or where it's generated.

And lastly, if I could, on acquisitions. I think back at the time of the capital raise, there was some talk of toll on the toll going through their own process. I referenced the point, I think, you made, Paul, about nothing material in the acquisition pipeline. Does that suggest that no longer looking at the Qube business and government -- sorry, resources and government division within that process?

I was referring to things under active consideration as you would have seen from the paper. I mean, that process is early days. So we've already said there are parts of the business that we may have look at, but it's probably too early to comment on what levels it comes through we would have and how big it might be.

I think, Anthony, Paul's comments was really around -- we've got a range of interest, possible acquisition opportunities. Some are very early days, some are reasonably well advanced, but what I think Paul was really saying, none of them are material in that context. They're all bolt-on opportunities that we're considering, excluding the toll opportunity that might arise.

Our next question is from Paul Butler with Crédit Suisse.

The hits that you had to earnings related to COVID, was that predominantly in the logistics part of the business with less of an impact in Ports & Bulk?

No. I think it's fair to say, Paul, it was across Ports, in particular, not the Bulk, but Ports and Logistics. But the main area of impact was across the Ports. Paul Digney might want to comment on this, but particularly in the regional ports areas.

Yes, Maurice. It was mainly around the regional ports of the general [indiscernible] business. And in Logistics, the East Coast felt some impact. But Western Australia and South Australia and Logistics didn't really have any impact. It was -- the Bulk business had no impact and then there was some small impact in New Zealand for a month around the forestry closing. So that was probably the areas that associated with that $130 million worth of revenue impact.

Yes. Okay. And given the -- what you're seeing for July and August is a pickup in shipping volumes. I mean, obviously, it depends how that continues to develop. But potentially, where we should be well and really past the worst of the COVID hit. I mean is that reasonable for you to take from what you've said today?

Yes, Paul.

I was going to say, one of the issues is timing. So obviously, COVID was only really at the end of February. So on a go-forward basis, all things being equal, you'd hope that yet each month is no worse than PCP, if you like, on a like-for-like, but we only had a part -- that's sort of the guidance where we said volumes in FY '21 are lower than FY '20. It's really just reflecting that time period issue. It was only really there for 4 months or thereabouts in FY '20. But on a go-forward, yes, we would hope we're past the worst of it, but it really comes back to the restrictions and new restrictions and what happens both here and globally with trade.

And then I think I was just going to add, Paul, the -- obviously, the easing of restrictions around COVID as we hopefully come out of it. What then falls back to the economic impact of that, unemployment, et cetera, when JobKeeper's second wave falls off.

Yes. Okay. And just a question on Moorebank. After you made the announcement about the Woolworths leases, I'm wondering if you've seen an increase in interest from other potential tenants on the back of that news [ clip ]?

Look, a little bit, Paul, we've sort of got a couple of good opportunities there. I think it's -- yes, a little bit, but I would also say, probably a little early yet. I think a lot of player -- a lot of companies are really focused on COVID and their operations. And that has been a bit keeping our team active, that's for sure.

Okay. And when you announced the raising, one of the, I think, potential uses of the capital you talked about was acquisitions. I'm just wondering if you could talk about what areas of the business you'd likely to be more focused on, both in terms of sort of the operating segment in North Sea geography.

Yes. Look, I think we don't limit where the opportunities come from. Obviously, you've followed us for quite a while. We're not about acquisitions just for the sake of acquisition and short-term EPS growth, we're really focused on making sure acquisitions fit the strategy, are at the right price, meet the hurdles, et cetera. And so it is a bit opportunistic across the businesses as to where those potential acquisitions come from. I think it's fair to say where we still see considerable growth in our business is probably the higher focused areas. We still think there's a lot of growth in our Bulk business, for example, we still see a lot of growth continuing in the logistics space. But having said that, we've been successful around growth in our Ports business with the forestry NFA acquisition. So it is a bit opportunistic, nothing specifically that we're targeting, put it that way.

Our next question is from Jakob Cakarnis with Citigroup.

I was just wondering if we could discuss some of the variability that you've got in the cost base just in light of potentially lower volumes moving into the business in FY '21 and some of the lessons that you've taken, particularly around labor optimization from the second half of '20. I just want to get a view or unpack that as to how those benefits could be in the cost base moving forward potentially?

Paul Lewis, do you want to start or me?

Yes, sure. Sure. Look, it really does depend on the activity. So as we've said, we do have a high degree of variability. In terms of labor, we've always had a mix of permanent part times, casual subcontractors on the equipment side, similarly. We've got our own fleet leased and use of subcontractors. So we do have a lot of flex, but it does depend very much in activity. And a great example of [ how our team ] -- why a small revenue impact had a bigger earnings impact because it's largely a fixed cost facility. In contrast, the operating division, in particular, Logistics has much higher variability. So this is a rough guide of probably, overall, it's 40% to 50% variability, but it does really depend on the site, the time frame and to the customers, et cetera. We spend a lot of time, as I mentioned earlier, when COVID first hit, getting our costs down as much as possible. So we think our costs are very lean. We've got plans in place, should begin other step down in revenue to further reduce the cost base. But we think with current volumes, we're pretty efficient. And as volumes increase, we get a high degree and that will flow to the bottom line. But again, actively dependent.

Just finally, over the last few years, you've had some benefit in the Infrastructure & Property division, I think, from taking some extra fill from WestConnex. The commentary that you gave us at the FY '19 result was that, that was unlikely to be a major factor in FY '20. How do we think about that moving into FY '21? And is there any other benefits potentially in that Property & Infrastructure division that we should think about? Obviously, you've got Minto coming out. Just wondering if there's any other offsets that we need to consider.

Yes. So look, quick to fill income, it's very hard to -- it depends on a whole range of circumstances, but we certainly don't think it will be material in FY '21. In terms of other income, the biggest 2 factors, I guess, would be the additional warehouse income as we get the full year in the tenants that we signed that sort of commenced operations during FY '20. That will also be partly offset by what happens around the IMEX, as we've indicated. During start-up phase, it will generate losses, and that was always the case. But the quantum of the losses, which will be a function of volumes, which is partly driven by the tenants and partly driven by what happens in terms of offsite volumes that go there.

And the other thing I'd add to that is the FY '20 result there was consistent with that guidance around lower fill income in FY '20 compared to '19. Probably the other thing just to call out here in terms of AAT reporting through Infrastructure & Property that we've now moved that across under Paul Digney as an operating business. It does sit separate to our underlying business because of the obligations under the ACCC undertaking to keep separate, but that's moved across there reporting to Paul and we'll be reported through there in the future, and we're very now -- rebadged that as just the Property division, which is effectively Moorebank and Minto and Beveridge in Melbourne while we hold Minto. So...

And just to add, when we did the results for FY '21, we'll adjust just if you've got comparabilities and like-for-like.

Our next question is from Owen Birrell with Goldman Sachs.

Look, just firstly, a quick question on Moorebank. You've obviously been railing since November last year. I'm just wondering if you can give us a quick update on the amount of volume of container volumes [ moving out ] of the facility in the last 6 months.

Yes. Look, it's been in the order of 13,000 TEU in the 6 months, a little bit less than what we would have hoped for or liked. There's a couple of things impacting that. Obviously, target volumes have been less than what we anticipated and the changes that are happening at target. And I think that's more a 1-year time frame over the next 12 months with the strategy that is happening there. And the second issue is that we've -- there's been a change of mix. We expected that we would have a reasonable amount of volume railing to Moorebank and then roading it to warehouses, and that's become less competitive in the short term given the fact that the New South Wales government in the last 6 months has been approving quite a lot of what we call AAs. Historically, the New South Wales government was approving that on the basis of going in and out of intermodals. For example, we used to -- [ the cap ] came up for -- on rail to Minto around the M7 to the facility. That's now more competitive on-road with AAs being given approvals in the last few months to move in and out of Port Botany. So the short-term impact of road versus rail has moved to a bit of a favor -- more favorable position on-road direct. So volumes are, in our view, will be a little slower on the take-up through the IMEX, doesn't change the medium to long-term IMEX model based on warehousing on the site, but we need to develop more warehousing to generate that.

And I said that 13,000 to you, that's the total amount over the period. So I would imagine the exit run rate would be a little bit higher? Or is that sort of a flat rate through the period?

No. So we do expect an increase in FY '21 with the new tenants coming online in Caesarstone and ATS.

And can I ask you, just more broadly, the impact from the drought has been a bit of a headwind for the last couple of years now. We're seeing some pretty positive indications on rains. I'm just wondering, do you think we're likely to see any benefit from the drought breaking in the FY 2021 results or is that going to lag?

Look, we would expect to see some benefit in FY '21, certainly in sort of November onwards period. We're getting a lot of inbound inquiry around expectations for the season coming, both in New South Wales and in Victoria. So an answer to the question, yes, we're hopeful of a bit of a rebound there. Not quite sure of the quantum at this point, but yes, it is more positive not only for Logistics, but potentially for Quattro in the form of exports.

Okay. Maybe just a small one on JobKeeper 2.0 post September. Are you likely to get a benefit from the extension of JobKeeper? And what's the likely magnitude? Is it going to be similar to what you've received today?

Look, I think too early to call for us. It is obviously revenue dependent and therefore, volume dependent. So the next few months will be interesting in that process. I think it's fair to say that probably, at this point, we -- Paul Digney, you may want to comment, but I suspect we won't have the full benefits of what we've had out of stage 1.

Yes, that's probably good summary now. So it's probably too hard to call at this stage, but we do have JobKeeper to September, which is 3 months. And we did have 3 months last financial year. So beyond September is a bit of an unknown for us and we may have some concessions as well. But it's probably more unlikely, but it's very unknown as COVID is.

Okay. Understood. And look, just, I guess, final question for me on Patrick's. Just maybe you can give us a sense of what the competitive landscape is like at the moment. We understand when your main rivals are having some industrial issues ongoing there. Has that continued to be a positive tailwind for you at Patrick's? Or are the new entrants claiming most of that share?

Look, I think from a commercial customer perspective, we're pretty much holding that 45% market share, it might shift a little bit based on volume of particular customers and regions, whether trades are strong, one trade line stronger than another trade line. What I tried to touch on is that we've maintained that 45% over the year. All of the major contracts, we don't have a contract renewal in FY '21. So I'm expecting a little bit more stability in the marketplace from that point of view. In terms of industrial relations, yes, our competitors are going through EA negotiations as are we at this point. We don't usually sort of book additional volume in that sense from industrial-related disputes where we might get subcontracts out of our competitors because generally, it may be beneficial when a competitor is going through an EA negotiations. But equally, we might have a negative when we go through the EA negotiations. And we are at that point in this stage where the union is currently seeking a vote of members to initial -- to be able to be in a position to take protected industrial action, which is really the normal rights under the negotiating arrangements that we live by.

And just from the -- I noticed the infrastructure charge increases that were acquired earlier this year have taken a somewhat different structure being more lenient to exporters and passing more the cost onto the importers. I'm just wondering, what was the reason behind this? And does that position you better to, I guess, gain better traction with a recovery in the domestic exports?

Look, you touched on some of the reasons why we went that way. I think the first thing I'd say is that we were listening to governments. Governments were -- particularly Victoria and New South Wales government in the Western Australia. So state governments at all levels were very focused on exports and our exporters and our export competitiveness internationally. So governments were signaling that very strongly. We decided proactively at Patrick to implement this structure that we've done where we separate import and export rates. Obviously, the target for us is by being more attractive to lower fee to exporters to hopefully gain more exports that exporters will look at it and say that it's more cost effective and more efficient to run boxes out where they can on vessels through Patrick. So that was obviously part of the strategy. It was pretty interesting if you follow it closely that it wasn't long after we did that DP World copied, so that tells you that we're on the right track. Having said that, other competitors haven't differentiated yet. And so we do see that as a potential competitive advantage against, for example, the [ third ] operators and particularly in Melbourne.

Our next question is from Ian Munro with Ord Minnett.

Three questions from me, please. Firstly, just catching up on the underlying results. Can you just confirm that there's no JobKeeper or COVID-related costs in that underlying result? And then secondly, just the Moorebank warehousing, $1.1 billion guidance, just confirming that, that includes warehouse of 3, 4, 5 but excludes 6, 7 and 8. And then thirdly, just following up on Maurice's comments regarding the AA policy in New South Wales and perhaps some rotation back to road transport. Can you perhaps just touch on the pricing strategy with Moorebank in that relative advantage of rail and coordination and you sort of -- you pitched to newer clients that are looking to come into the project?

Paul, do you want to take the first one?

Yes, sure. So in all the COVID figures that Maurice talked to are in the underlying results. So as we indicated, COVID has impacted the underlying results by -- were called out at least $21 million NPAT. And as flagged, that doesn't include -- we haven't tried to estimate the volume -- how much of Patrick's decline in earnings is attributable to COVID due to market volumes. So all those figures are in the underlying results on the Moorebank CapEx. So that $1.1 billion to $1.2 billion does include the remainder of 3, 4 and 5 as well as the Woolworths warehouse CapEx to the target. It doesn't include additional warehouses maybe built beyond those that are either already under construction or the Woolworths one which we've identified. Maurice, I'll hand over you to talk about that.

Yes, yes. So that summary on that was it excludes 6, 7 and 8. And then, yes, look, the AA issue is an issue not around, in our view, the competitiveness of rail to Moorebank and warehousing at Moorebank. It's the short-term issue around rail plus road to a warehouse versus road direct. But the thematics is still right, correct in our view around the long-term opportunities there, particularly as governments move to replace fuel levies with a road-based use of [ pricing ] for trucks, the continued increases in tolls and the like, although that whole modeling, it's just a short-term impact as we see it. But yes, it does continue to support the strategy that we've been engaging around with rail to Moorebank and automation ultimately to warehouses. That will be a function of the tenant and the tenant mix and the tenant demand for the level of automation in warehousing and the transfer in automation mode from the IMEX to those warehouses. But look, you only have to look at other parts around the world to see that [ high bay ], semi-automated, fully automated warehousing is becoming more and more popular. The issue from a commitment to a lease at Moorebank perspective is that it's a much bigger financial decision for those parties to invest in that. And that's why I think it probably does take a little longer to land deals in relation to automated, semi-automated warehousing for potential tenants.

Our next question is from [ John Mill ] with [ Carodyne ].

Maurice, can you give us an indication of how we're dealing with inland port opportunities in Melbourne and Brisbane and also how we're addressing the move to e-commerce cargo in the new world?

Yes, sure. I'll take the first question first, and Paul, you might want to add to it. But in relation to Melbourne, we had involvement in the intermodals for quite some time. And the challenge we see in Melbourne is still this very issue that I talked about in respect to Moorebank, and that is the competitiveness of road versus rail, financial competitiveness. And we're still in the camp that short shuttle metro rail in Melbourne is going to be a challenge against road despite the funding going into infrastructure that has been announced recently. But what we believe in Melbourne is, more than likely that's going to happen, is that the [ government ] is spending a significant amount of money on an inland rail between Melbourne and Brisbane. And Melbourne needs an intermodal hub at the end of that Melbourne to Brisbane Inland Rail. And everybody in Melbourne knows that interstate rail will not continue in the medium to long term to access South Dynon close to the city where there's limited rail capacity, can't double-stack trains. And so the Victorian government's got 2 alternative or 2 options for future intermodals. It's not one on the other. In the long run, it's likely to be both ones, the western intermodal freight out towards [ Jordan ] inter terminal. And the second is the Beveridge intermodal terminal to the north, and that's the site that we have exclusive options to purchase in excess of 1,000 hectares of land at Beveridge. So our medium-term vision is that what's going to really drive shuttles in Melbourne is going to be a medium-term intermodal terminal on the back of the Melbourne to Brisbane Inland Rail, where we expect to see more shift to rail, not just Brisbane and Melbourne, but as part of the strategy out of Sydney and particularly Moorebank. So talking to Woolworths, they would -- they see moving volume out of Moorebank to Melbourne on rail as a future opportunity. So our strategy is really around solving that Inland Rail intermodal, hopefully, at Beveridge. That will then drag significant metro shuttles out of the port into Beveridge for the same customer base that would be a tenant at Beveridge, a similar theory to Sydney and strategy to Sydney and Moorebank, except off the back of the Inland Rail driving the intermodal where in Sydney, it's been the metro shuttles that's driven the intermodal development at Moorebank. Brisbane, we see that as more longer-term at the moment. Road is still very competitive. We have rail coming into Fisherman Islands from the north of Queensland. That's a facility that's run by the port on Fisherman Islands. Equally, I think in the medium term, what the Port of Brisbane and the Queensland government are pushing politically is that the Melbourne to Brisbane Inland Rail has a link that goes from Brisbane, if you like, Downtown Brisbane through to the Port of Brisbane that still hasn't been resolved. At the moment, the terminal in Brisbane for interstate rail is Acacia Ridge, and there's been a number of options put forward for a major intermodal in the medium to long term in the south of Brisbane, again for traffic reasons. So it's a bit of a -- the answer to your first question is a medium-term strategy for us. In relation to e-commerce, it's very interesting to see, and we're watching all of that very closely. What we what we are seeing is significant e-commerce in what I call the last mile, the online retail deliveries to home, [ wide fence ]. That's a part of the market that we're just not involved in and have no intention of being involved in. It's highly competitive. Some of the problems that all have got today come from that express rate capability. So we have no interest in that space. What we do, do within our business is with e-commerce, we're often asked by the customer to provide enhanced e-commerce and what we're doing on a customer-by-customer basis is interfacing with their systems with our -- to our systems to provide data in an e-commerce sense. And that's what we're doing with Shell, for example, on the Shell contract, what we'll be doing with BlueScope on the [ BlueScope ], what we do with all the mining customers. And so at this point, that's continuing. For us, it's a watching brief on what I'll call the e-commerce disruptors, the blockchains of the world. We're watching that closely. We don't see it as a major threat to our business. What we need to do is, we have data, we control the data. Through Patrick's, it controls a lot of data through one stop, the e-commerce hub for the ports. And that's obviously very important data that we control or have an influence over in the context of what might emerge in a broader e-commerce sense. But if I talk to Paul Digney's people, they will tell me -- they keep on telling me that when a container ship arrives, it still has to be unloaded off the ship, put into a tunnel, put onto a truck and into a train and deliver to our warehouse or an intermodal. And those activities will continue to into the future, and it's how we interface with our customers. That's the key point there.

Our next question is from Scott Ryall with Rimor Equity Research.

I missed some of the prepared comments, I apologize, but did you comment on the potential -- I mean you commented on the Fremantle extension. But did you comment at all on the potential for relocation at the container port from Fremantle? And if not, what are you looking at in terms of opportunities for you guys there, please?

Yes. Look, we didn't comment earlier. I think it's early days in terms of that announcement for us. What the port has indicated or the government has indicated is that they'll start the planning processes for an outer harbor facility with an expectation of mid-2030s. And what they're saying is where -- that's when they expect the Fremantle to reach capacity. I'm not going to contradict that. But as you go forward, there's always enhancements to capacity. So I think it is a 10- to 15-year sort of project for them, even maybe longer at the moment. I think you recall, we were asked to bid on options around 7, 14 and 21 years in Fremantle. Those final negotiations haven't been completed, but we would expect to see it quite more than 10 years at least in Fremantle. And what hasn't also been worked through is how do you actually transition out of Fremantle to a new facility, but there's a lot of work to be done.

Yes. And would you envisage the Fremantle contracts have some sort of clause that gives you the right to transfer equipment?

No, I wouldn't go that far, not at this stage. They're separate processes. The lease with the Fremantle's with the Fremantle Port Authority, at the moment, the carriage of the work on the other harbor facilities with a completely different group that was set up by the government to facilitate the planning -- the evaluation and planning processes.

Okay. Understood. And then in terms of your outlook, you talked to the limited visibility on near-term volumes, which I think everyone understands. But are there any particular segments? And I guess, import related or export related, could you just comment on particular segments that you think are -- are the ones that perhaps look better or more challenged from your point of view, please?

Yes. Look, I think we see continuation of FY '20, where the challenges for us are what happens with trades like container volumes, automotive, motor vehicle volumes. And the reason that I single them out is because, as Paul touched on earlier, generally in a Patrick sense with container volumes and an AAT sense with automotive motor vehicle volumes, they are high fixed cost businesses that volumes impact the earnings out of that on the downside and on the upside. So they're probably the ones that call out in terms of positive or negative impacts around uncertain volumes. I think the flip side of that is the parts of the business that we've called out that have had virtually no impact from COVID-19, which has been nearly all of our bulk volumes. Bulk commodities is continuing to move. And following the almost a month shutdown in Forestry and New Zealand, that's continued to be strong, although on a cautious watch with the macro issues around the U.S.-China relationships and the politics there.

Could I ask you expand a little bit on that, Maurice, just with respect to containers, container volumes in particular? And just what [indiscernible] of containers you're seeing as most positive or negative for either import or export?

Yes. Look, we've always had a view -- look, as I said earlier, we don't monitor the contents of the containers. That's done through port authorities and [ freight ] revenue that they collect. All I'd say on that is that we've always had a strong view that consumer demand is what's driving container imports, housing demand, consumer demand. And as an island nation, everything, every box that comes into the country ultimately has to leave the country and go back out either as a full export or an empty export. So it's the import side that really drives total volumes. We had strong growth a couple of years ago, 8%, 9% growth on the back of strong housing. Obviously, that's subdued. That's why I've called out earlier, just the difference between a slowing economy and the COVID impacts on container volumes where we did see decline in approvals for apartments in particular. So that flows through to import volume. The flip side of that has been really strong retail sales through organizations like Bunnings and Officeworks, et cetera, offsetting the decline in bricks-and-mortar retailing, but then there's positives on consumer online retailing. So really, it's got difficult for us to call. On the export side, obviously, the majority of exports, quite a lot of exports are the -- manufacturing based, the likes of Australian Paper and [indiscernible] are agri-based. Obviously, the agri-based exports, we expect to grow on the back of the drought now being over in New South Wales. So that export commodity, whilst, as I touched on, component, total volumes are dependent on imports. The export is important to us because from a Qube Logistics perspective, we like to touch the box as many times as we can between the day it arrives in Australia and the day it leaves. And it's obviously more valuable and earnings are better on export commodities than empty containers at an empty container park back to the port for repositioning into Asia.

Our next question is from Ben Brayshaw with JPMorgan.

Apologies if you've covered this outline, it's JPMorgan dropped out for about 15 minutes during the second half of the presentation, and we weren't able to dial back in. So my question is just around -- firstly, is in relation to Moorebank. I was wondering if you could just share some thoughts around the process from here in terms of having enough information to make an informed decision on monetization. And any key milestones you think are relevant in that insofar as either planning is concerned or third round offers? You mentioned that the process has just entered into a second round offer as of last Friday.

Yes. So look, I think from a milestone perspective, I don't think we see an outcome until the end of the calendar year, probably at the earliest. As I touched on, on stage 3, we will go into with a shortened list. Too early to call exactly on that. As I said, our advisers are plowing through the submissions that we only got late last week. I think yes, we obviously have always said that we'll only proceed with the transaction if it makes sense and accretive for Qube shareholders. So there's a fair bit to be done yet, I think. Paul, do you want to add any more?

No, I think that covers it. There's no key milestones. We're just going to go through a process and see if you can find the right partner to the right appropriate value.

Just as a follow-up to that, and it's a difficult question to answer, I know, but you mentioned there were quality offers received. Is pricing at or around where you would like it to be at the moment? Or does there still need to be some upward adjustment in subsequent stages of the process?

Look, we wouldn't comment on that at this point, but it's too early to comment on.

Yes, I'm just -- no, I understand. I'm just curious as to what the time requirements are being driven by insofar as trying to firm up a proposal that you're happy with? Are you able to touch on whether planning is one of those? Or is it the management agreement? What are the main issues, please, if you don't mind, just around your key focal points in here?

Look, we don't have any time constraints whatsoever on us, and I don't think there's any development constraints that stop the process going forward. Look, the next stage will involve a detailed -- a more detailed due diligence process as well. So it's just really process rather than constraints.

Our next question is from Rob Koh with Morgan Stanley.

Just conscious of time. I'll just ask one quick one. I noticed you've completed the NFA transaction, $26 million. Just wondering if you could let us know when that completed so we can gauge how much contribution was there? And then also, historically, you always do something clever with your deals. And I presume this fund is no different. So just wondering if you can give us some color on what the opportunity is with NFA in the forestry space.

Paul, do you have...

Yes, completed at the end of January, yes, and just provides -- so you guys know?

Yes. And look, NFA is predominantly [ correct ] accordingly in the South Island of New Zealand. It's a marshaling -- log marshaling business, and we see the opportunity. There's 2 critical activities in the forestry operations that we acquired many several years ago with ISO. There's the stevedoring of forestry products on the vessels, but there's also the marshaling activities. And so the integration of those 2 activities in the South Island is obviously an opportunity that we see out of NFA coming up going forward.

Yes. That's great news. I mean the only thing with NFA was it was very minor of the contribution last year because obviously, it's got impacted by COVID through the mid months and the NFA business was closed for a month. So yes, it wasn't a full contribution of the 5 months of the acquisition.

So I think if we're just about there...

We have one last. Our last question would be Paul Butler with Credit Suisse.

Just a quick follow-up on your comment about more AAs being used. How many 20-foot containers do you fit on an AA compared to the other alternatives?

So it's -- the AA now takes 4 TEU. So it can take 2 40-foot boxes. Technically, it could take -- sorry, did I say for 2 40-foot boxes? It technically could take 4 20-footers, but they would be significantly weight limited. So you couldn't take full weight. So it's a 4 TEU truck compared to the historical 3 TEU truck that would have access port. Given that, that was the last question, I'll call an end to the presentation today. Thank you very much, everyone, who dialed in. Thank you for those who support, continue to support us. We look forward to catching up in the near future. Thanks very much.

Thank you. This does conclude our conference for today. Thank you for participating. You may now disconnect.