Ann: Response to ASX Query, page-6

It is curious how quickly this earning upgrade has evolved given that on 20 March LAU advised that the ASX that earnings for the June 2023 year were not expected to be materially different from the then issued EBITDA guidance of $68 to $71m to now today less than one month later LAU is guiding EBITDA of $85 to $90m.

This suggests that either (1) the surge in demand following the collapse of SRL has only crystallised over the last month or (2) LAU has rerun its forecasts over the last few weeks and it is now apparent to them that there is a significant increase in profitability coming. Given the collapse of SRL occurred on or about 10 March, LAU is forecasting a material uplift in profitability for at best 3 1/2 months of the FY 23 year. The begs the question as to what the expected impact would be for the 12 months ended 30 June 2024 assuming the increased business and pricing sticks.

The comments in todays announcement where it talks of increased utilisation of road and rail equipment plus only the selective acquisition of SRL equipment suggests that LAU's margins are improving (i.e. increased revenue without depreciation and interest increasing at the same rate) and therefore NPAT should be a greater percentage of EBITDA that the business was able to achieve prior to the SRL collapse.