Lara Ballantyne Jaylen Gadhia Rachel Kirby Sami Zubair

Agenda
Current Situation
Objectives
Dista
nce
Satisfaction
B
r
 Current Situation

POLITICAL ECONOMIC REPUTATIONAL

50% of revenues came from online sales channels

East-West routes = 38% of revenue and 35% of passenger km’s

32% of Danes are motivated to use the train system, however rarely do

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

 What Matters
Most Alternatives Increase Rail Maximize Financial Strengthen ST & LT
Travel Satisfaction Impact Brand Image Benefits
Increase Fleet
Commercialize Stations
Improve Technology
Market the Brand

Alter Interior of Trains

Focus on On-­‐Board
Amenities
Enter Alternative
Transport Markets

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

 The “DSB” Strategy
OBJECTIVE STRATEGY IMPAC
• Facilitate commercialization of
T
Increase
D passenger
surrounding train station areas
with improved Park & Ride
Capture new
customer
(Distance)
facilities and station refurbishment segments
kilometers with added amenities
travelled • Deploy a comprehensive digital
S Maximize
customer
strategy focused on greater
integration, communication and
Facilitate an
improved
(Satisfaction) experience
satisfaction satisfaction
for customers
• Continue improving on
punctuality

B Improve
DSB’s brand
• Introduce a message-heavy
marketing campaign emphasizing
Better
reputation
(Brand) amongst the
image benefits of railway travel and
Danes
DSB

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

The Opportunity
By implementing the DSB Strategy, Danish
State Railways will be able to increase the
amount of passenger kilometres in Denmark by
over 7.5%, focus on improving the customer
experience and remain profitable, realizing an
NPV of between 3.4B – 4.9B DKK by 2018, all
while satisfying the triple bottom line of
economic, political and reputational gain.

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

Increasing Passenger
KM’sHow do we successfully convert passenger cars to train riders?

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

Commercialize Stations
Increase Facilitate commercialization of
D passenger surrounding train station areas with Capture new
customer
(Distance) improved Park & Rides and station
refurbishment along the East-West line segment
kilometers
travelled
Work the existing
infrastructure of the Allow for greater Implement WiFi and pop-­‐up
train stations along penetration of the cafes into 20 train stations
the East-­‐West line to passenger cars and bike along the East-­‐West line as an
make them as much markets by offering more added incentive to use the train

1 2 3
destinations as they substantial free parking as travel method of choice
are departure points facilities during the next 3 years

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

 Focusing on Satisfaction
The #1 priority of DSB moving forward
Punctuality &
Improved satisfaction will help drive growth Frequency
1. Continue working with
Opportunity for improvement and innovation BaneDanmark to reduce
maintenance in peak
hours
Drivers of Customer
Satisfaction 2. Discontinue waiting for
late passengers

Traffic Information

1. Commit to full-fledged digital

strategy utilizing Rejseplanen
and Rejsekortet

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

 A Digital App-roach
Rejseplanen Seat Reservation Reliable in Real-Time Rich Data Collection

• DSB’s most • Up to 60% of seats • Weight and phone • Integration of

opportunistic asset available for based tracking to Rejsekort, Rejseplan
• Hugely popular reservation online determine capacity, and Wifi data
amongst • Cost of 6 DKK/trip shown in real-time tracking will reveal
users • Easily adaptable to • 5 additional hires many insights
• Add an customer wants, to design & • Can be used to
account needs & feedback manage all provide a more
feature to gain communication complete and
better insights systems satisfying experience
into customers as well as
• DSB can leverage operational
further to greatly efficiencies
increase customer
satisfaction
Current Situation Objectives Distance Satisfaction Brand Financials & Implementation
The Benefits of Digital
Customer DSB

1 1
experience Capitalize on both consumer and
industry trends by further leveraging
A seamless public transport current capabilities

Provide higher customer satisfaction

2
2
availability of more information

Greater transparency and

accuracy, reliability and
convenience

Ability to improve operations through

rich customer and operational data
3 Ability to chose to travel in collection

Current Situation
3 Objectives Distance Satisfaction Brand Financials & Implementation
greater comfort
Brand Image
Image better among
regular customers than
occasional users

Customer satisfaction
(contrary to image) is
high compared with
European counterparts

TARGETING LIGHT
& NON-­‐USERS

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

 Repositioning
PLUS TIME DELAYS

WAITING
EFFICIENCY TIME

ENVIRO-­‐FRIENDLY SLOW

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

#BuyTime Campaign
250,000 hours per day
wasted in traffic

“+time” is greatest benefit

over competing modes

With DSB, customers can

“buy time”

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

 #BuyTime Campaign

WHAT? Billboards Print Train Wrapping

High traffic highways Baresso bathrooms located Throughout Denmark

WHERE? connecting outside cities in larger cities outside routes, with greater
with capital region capital region emphasis on Jutland

Motivated/unmotivated Motivated/unmotivated light

WHO? Motivated/ light users
light users users, motivated non-­‐users

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

 Social Media &
Website

‐-­ Hashtags ‐-­ Press conference & report

‐-­ Tie all plaTorms together addressing company changes and
‐-­ Encourage followers to share how concerns relating to punctuality
“bought time” could help them in their ‐-­ No waiting for late
daily lives  develops dialogues passengers
‐-­ Targeting specific people with ‐-­ Construction on East-­‐West
specific products line & creation of
accommodations
Current Situation Objectives Distance ‐-­
Satisfaction Any Brand
unexpected delays
Financials & Implementation
 Financial Impact
1 2 3
0.3% - 0.7% Additional 13K
Assumptions: WACC = 7.5% converted car commuters from
commuters parking
initiative

Utilization Increase of DSB Plan Net Income Impact of DSB Plan

2013-­‐2018 2013-­‐2018
7600
4%
800 19.5%
Passenger Km(s) in Denmark (Millions)

CAGR
7400 700 CAGR
3% 16.5%

Net Income (Millions)

7200 Passenger Million KM 600
7000 CAGR (without) 500
CAGR NI (without)
6800 Passenger Million KM 400
(with) Pessimistic NI (with) Pessimistic
6600 1.5% 300
CAGR Passenger Million KM 1.5% NI (with) Optimistic
6400 200
(with) Optimistic CAGR
6200 100
6000 0
2013 2014E 2015E 2016E 2017E 2013 2014E 2015E 2016E 2017E 2018E
2018E
Current Situation Objectives Distance Satisfaction Brand Financials & Implementation
Overall Impact of “DSB”

1 Enhanced Top-Line
Growth
DKK1.2B – DKK
1.9B
10% -
15%

2 Positive NPV DKK 3.4 B – DKK

4.9B

3 Exceed Desired
Passenger Growth 7100-7500 M KM 9% -
12.5%

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

 Implementation
Launch
Begin #BuyTime Evaluate data and feedback from Evaluate strategic
enhancing marketing Rejseplanen services and adjust efforts and adjust
Rejseplanen campaign accordingly
interface

2015 2016 2017 2018

Begin enhancing • Launch updated #BuyTime

Add 8 additional Add final 8 park & go +
parking and Rejseplanen with campaign
park & go + leisure leisure train stations
leisure facilities new features ends
train stations
in 4 stations
• Simultaneously
open first 4
enhanced stations

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

 Key Takeaways
By implementing the DSB Strategy, The Danish System Railway can…

Realize an NPV Regain the trust

Increase of 3.4B – 4.9B of the Danes by
passenger KM’s
DKK and increasing
by 9% - 12.5%
increased reliability and
revenues of satisfaction
10%-15%

Political Economic Reputational

 QUESTIONS
Presentation:
3. Current Situation
4.What Matters Most
5. The “DSB” Strategy
6. The Opportunity
7. Increasing
Passenger KM’s
8.Commercialize Stations
9. Focusing on Satisfaction
10. A Digital App-roach
11. The Benefits of Digital
12. Brand Image
13. Repositioning
14. BuyTime Campaign
15.BuyTime Campaign 2
16. Social Media & Website
17. Financial Impact
18. Overall Impact of
“DSB”
19. Implementation
20. Key Takeaways
GOAL: Increase amount of passenger kilometres, improve customer experience & remain profitable
Finances:
24. Revenue Assumptions
25. Capital Structure
26. Cost Assumptions
27. DCF
28. Financial Comparison
Risks:
29. Risks & Mitigation Strategies
30. Baresso Contingency
31. Station Coffee Shop
Trains:
32. ST Alternative to WiFi
33.Bikes and the Issue of Space
23. LT Plan
34.Construction on East-West
Line
35. Coffee Machines
Marketing:
36. Locations for Billboard
37. Billboards
38. Earth Week
42. Segmentation & Targeting
43. Motivated Light User
44. Unmotivated Light User
45. Unmotivated Non-User
46. Travel Purpose
Other Strategies:
39. Why Parking?
40. Rejected Alternatives
41. Commercialization Locations
LT Plan (10 Years)
• Replace current trains with newer, more efficient, self-operating
trains
• Expand frequency of trains and train routes based on user data
• Increase amenities offered on-board
• Explore entry into alternative transport methods

• Simplify product portfolio for tickets

– Potential 4 classifications include:
• Youth
• Student
• Adult
• Senior
– Only differentiate prices based on peak vs. non-peak hours
• Eg. Monday – Friday 7:00am – 6:00pm = peak
• Everything else = non-peak
Capital Structure

Growth 6%
Tax Rate 22%
Debt 8,480 M DKK, TS 1,865 M DKK
Rf 2%, MRP 4.8%
Unlevered Beta 0.94
Green Field Premium 1% , ru=7.5%
Revenue Assumptions
Optimistic Pessimistic
Marketing 0.66% 0.33%
Park & Ride 13,100 new spots, doubling the parking
Seat Reservations 6 DKK per, 60% available, 50% get
booked
Cost Assumptions
Billboard 16,250 DKK 9,850 DKK
(Copenhagen) (Outside Copenhagen)

Wrapping 98,550 DKK x 200 19.7M DKK

Indoor Ads 2x12x2x490x52 DKK 1.2M DKK
IT PlaTorm 525k x5 2.6M DKK
Parking 26K DKK x 13,000 DKK 344M DKK

Café 1.3M DKK per store, 20 years

Avg. Rent 3050 DKK/sq meter x 36 (we get a third)
 (D K K millions) 2013 2014E 2015E 2016E 2017E 2018E
Revenues
R e v e n u e B as e 12,340 12,525 12,713 13,295 13,930 14,581
Add-­‐ Ons
M a r ke ti n g C a m p a i g n 184 186 189
Par king & C a fé 38 76 77
S e at Re s e r vati on P latf o rm 164 167 169
Total R e v e n u e 12,340 12,525 13,098 13,724 14,366 14,581

C ost
B as e C ost 9,558 9,701 10,145 10,630 11,127 11,294
Add-­‐ Ons
M a r ke ti n g ca m p a ig n 28 8 8
A pp licati o n & S e at Re s e rv ati on I m p l e m e n t ati o n 3 3 3 3

Operati ng C ost 9,558 9,701 10,176 10,641 11,138 11,297

EBI T DA 2,782 2,824 2,923 3,083 3,228 3,285

EBI T DA Margin 0 0 0 0 0 0

D e pre c i ati o n 1,892 1,920 1,949 1,979 2,009 2,039

EBIT 890 903 973 1,104 1,219 1,245

I nterest E x p e n s e 504 504 504 504 504 504

I n c om e b e fo r e taxe s 386 399 469 600 715 741

Taxe s 97 100 103 132 157 163
Net Income 289 300 366 468 558 578

CAPEX 1,720 1,746 1,846 1,947 1,974 2,003

Change in N W C 150 151 152 153 154 155
FC F 716.20 728 710 741 832 852
 ( D K K millions) 2013 2014E 2015E 2016E 2017E 2018E
Re ve n u e s
Re ve n u e (without) 12,340 12,525 12,713 12,904 13,097 13,294
Reve nue (with) 12,340 12,525 13,098 13,724 14,366 14,581
1.50% 1.50% 1.50% 1.50% 1.50%
1.50% 4.58% 4.78% 4.68% 1.50%

EBITDA (without) 2782 2824 2866 2909 2953 2997

EBITDA (with) 2,782 2,824 2,923 3,083 3,228 3,285

EBIT (without) 890 903 917 931 945 959

EBIT (with) 890 903 973 1104 1219 1245

N I (without) 289 293 298 302 307 311

NI (with) Pessimisti c 289 300 366 468 558 578
NI (with) Opti misti c 289 300 398 533 657 680
1.50% 1.50% 1.50% 1.50% 1.50%
3.64% 22.16% 27.88% 19.16% 3.71% C AG R
Change 4.57% 1.5%
Change 58.04% 16.5%
Change 70.66% 19.5%
Passe nger Million K M (without) 6246 6340 6435 6531 6629 6729
Passenger Million K M (with) Pessimisti c 6246 6340 6562 6809 7060 7166
Passenger Million K M (with) Opti misti c 6246 6340 6669 7024 7385 7496
1.50% 1.50% 1.50% 1.50% 1.50%
1.50% 3.51% 3.76% 3.68% 1.50%
Change 4.57% 1.5%
Change 9.20% 3.0%
Risks & Mitigation Strategies
Risk
Partnership with Riccos
Park & Ride doesn’t drive more train
commuters
Danish government prevents seat
reservation surcharge
Everyone takes to the reservation app
Marketing campaign has little impact
Significant delays deter from campaign
message
Mitigation
Partnership with another coffee company
Can always sell the land; would be careful
not to over acquire
Provide the service for free
People’s expectations are clear and we
now have another revenue driver
Can cut costs quickly
Hold a press release to reach out to
consumers directly
Baresso Contingency

• 33 restaurants in Denmark
• 5 million visitors every year
• Focus on those outside
capital region

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

 Station Coffee Shop
• Riccos
• 10 cafes in Denmark
– 9 in Copenhagen
– 1 in Aarhus
• One of top 10 coffee shops in
Copenhagen (Official City Website)
• Offering: opportunity for expansion

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

ST Alternative to WiFi

• Mimic the Swiss and

• Too costly and beyond instead adopt repeater
DSB’s immediate control technology onboard trains
• Requires significant travelling to more remote
investment of up to 400M areas
DKK that could be better • Easier to implement, more
spent cost effective, and more
reliable for passengers
Bikes and the Issue of Space
Therefore, in the interest of space
and seating available, we believe the
train layout should remain as it is in
order to maximize existing space on
trains

Though a popular method of transport

for Danes, bike storage on trains at a
larger scale capacity than what DSB
already has would be an inefficient use
of space (i.e. “bike valet”)
Construction on East-West Line
TRANSPARENCY
– Openness regarding 30-minutes
delay times (and potential further
delays) in press release
– Accurate, real-time updates with
DSB App

ACCOMODATION
– Provide customers with cafes at
stops along East-West line
– Improved experience and
satisfaction by providing
customers with ability to sit and
work
– Free car and bike parking

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

Coffee Machines
- Coffee stations and vending
machines
- Increased on-board customer
satisfaction
- Self-serve  eliminates
employee pay, open 24 hours
- Mobile phone & card payment
options
- Begin with 3 coffee machines,1
snack machine, 1 water cooler
on 50 trains
Locations for Billboard
• 24 billboards

concentrated
around
Zealand
• Others in high
trafficked
areas of
Jutland &
Funen
 Billboards

‐-­ 74% of
regional
commuters into
metropolitan
Copenhagen come
from Zealand
‐-­ 26% from Scania
‐-­ Targeted
highways
‐-­ E47
‐-­ E20
‐-­ E65
Earth Week

FREE
Wednesday, TRANSPORT
TRIALABILITY
APRIL 22 ON OFF-­‐PEAK
HOURS
 Why Parking?

13K commuter target:

Cars / Capita 607 480 21% less cars
Denmark Population 5,600,000
less: Top Four cities -­‐1,750,000
3,850,000
Inhabitants in Half-­‐Live in Secondary Cities 50%
suburb / 1,925,000
parking spot 47 153 69% less Persons/Spot Now 153
at the train parking spots Spots now 12,565
Goal (people/spot) 75
station Goal 25,667
To build 13,101
Rejected Alternatives
Objective Potential Impact Reason for

Elimination
Acquire a Secure an alternative
complementary source of revenue to Expand reach and No real prospects
compensate for
transportation potential lost revenue market share within that would align with
company from railway the Danish transport DSB’s vision and
improvements industry growth strategy

Partnership with a Appeal to the biker Increased number of Bike sharing has proven
bike sharing portion of the consumers considering to be unpopular
transportation market the train as a among the Danish
company to bike to the train transport option people (i.e.
City Bike)

Shu?le service to/ Get people who are further Expanded reach to Majority of people who
than 2 km from the nearest motivated non-­‐users in would be out of range of a
from train station train station without a need more rural areas of train station would likely
in remote areas for parking Denmark already have access to a car
Commercialization Locations
Cafes, Wifi, and additional parking will become available at 20 stations on the East-­‐West line

An additional 5
commercialization
locations will be developed
at Hobro, Arden, Skorping,
Svenstrup, and Aalborg
Segmentation &
Targeting
Image better among
regular customers than
occasional users

TARGETING LIGHT
& NON-­‐USERS

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

Motivated Light User
Motivated
Image better among
regular customers than Light
occasional users

•
Users
DESCRIPTION
Older, married •
HOW?
Billboards, print, •
WHY?
33% (largest) of
• Larger cities trains DSB
customers,
outside capital • Subsequent 19% of Danes
region social media • Leads to greater
TARGETING LIGHT
• High income opportunity for
& NON-­‐USERS • Enjoy relaxed 1’ ticket promo
social • Increased
surroundings motivation

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

Unmotivated Light User
Unmotivated
Image better among
regular customers than Light Users
occasional users
DESCRIPTION
DESCRIPTIO
DESCRIPTIO HOW?
HOW?
HOW? WHY?
WHY
•• N N
Smaller cities
Older, married •• Billboards, print, •• 28% ?
13% (second
of33%
Danes
away from
• SmallerLarger
cities trains
Billboards,print,
Billboards, print, largest)
• (largest) ofofDSB
DSB
Increased
nearest train customers, 16%
away
cities from
station outside • Subsequent
trains
trains customers,
motivation
of Danes (such
•nearest
Find train
capital region
public •• social media •19%Leads
of Danes
that they will use
to greater
TARGETING LIGHT • opportunity
• station
transport
High • App
Subsequent
Subsequent trains)Leads for to
& NON-­‐USERS • limiting
income Take • Parking
socialmedia
social media 1’ ticket promo
greater
• • car/bus
Love theirEnjoy
to • Parking • Increased
opportunity for
car motivation
relaxed
work 1’ ticket promo
social • Increased
surroundings motivation

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

Unmotivated Non-User
Unmotivated
Image better among
regular customers than Non-­‐Users
occasional users
DESCRIPTION
DESCRIPTIO HOW?
HOW? WHY?
WHY
•• N
Smaller cities ? Danes
Older, married •• Billboards, print, •• 13% of33%
• away from
Larger trains
Billboards, print, • Increased
(largest) of DSB
nearest train
cities outside
station • Subsequent
trains customers,(such
motivation
• capital
Take region
car/bus to • social media 19%that
of Danes
they will use
TARGETING LIGHT • trains)Leads to
• workHigh • Parking
Subsequent
& NON-­‐USERS income social media greater
• Enjoy opportunity for
relaxed 1’ ticket promo
social • Increased
surroundings motivation

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation

Travel Purpose

Current Situation Objectives Distance Satisfaction Brand Financials & Implementation