Transurban Group Ltd. · ASX:TCL
Transurban — H1 FY2015 Earnings Presentation
66 slides from Transurban's earnings presentation, Feb 12, 2015
Slide 1: FY15 Half-Year Results
FY15 HALF-YEAR RESULTS 12 FEBRUARY 2015
Slide 2: Disclaimer & Basis of Preparation
DISCLAIMER & BASIS OF PREPARATION This publication is prepared by the Transurban Group comprising Transurban Holdings Limited (ACN 098 143 429), Transurban Holding Trust (ARSN 098 807 419) and Transurban International Limited (ACN 121 746 825). The responsible entity of Transurban Holding Trust is T
Slide 3: Agenda
AGENDA 1 FY15 half-year in review 2 Financial results 3 Market update 4 Appendices 3
Slide 4: FY15 Half-Year in Review
FY15 HALF-YEAR IN REVIEW SCOTT CHARLTON, CEO
Slide 5: FY15 Half-Year Financial Highlights
FY15 HALF-YEAR FINANCIAL HIGHLIGHTS1 FY15 HALF-YEAR INCLUDING ACQUISITIONS AVERAGE DAILY TRAFFIC GROWTH PROPORTIONAL TOLL REVENUE GROWTH PROPORTIONAL EBITDA GROWTH 2 ` HALF-YEAR FY15 DISTRIBUTION 3.5% 36.7% 37.4% 19.5₵ FY15 HALF-YEAR EXCLUDING ACQUISITIONS3 PROPORTIONAL TOLL PROPORTIONAL EBITDA REVE
Slide 6: Distribution Growth
DISTRIBUTION GROWTH FY15 distribution guidance upgraded to 39.5 cents − Strong first half traffic and underlying operational performance − Expectation of 7 cent fully franked component − Expected to be approximately 100% free cash1 covered Interim distribution of 19.5 cents declared − Inclusive
Slide 7: FY15 Half-Year Highlights: Portfolio Snapshot
FY15 HALF-YEAR HIGHLIGHTS PORTFOLIO SNAPSHOT 31 DEC 2014 31 DEC 2013 Network positions 4 3 Assets in operation 13 8 Development projects 31 32 Development projects lane kilometres 118.5 205.5 Average weighted concession length 28 years4 24 years Total lane kilometres (assets and projects) 1,286 943
Slide 8: FY15 Half-Year Highlights: Portfolio Performance
FY15 HALF-YEAR HIGHLIGHTS PORTFOLIO PERFORMANCE PROPORTIONAL TRAFFIC TOLL TOLL REVENUE EBITDA NETWORK HIGHLIGHTS GROWTH REVENUE CONTRIBUTION GROWTH1 (AUD) (ADT) 1 GROWTH1 Network development activities contributing to traffic growth. Sydney 2 M2 Upgrade (completed August 2013) continuing to unde
Slide 9: Consistent Strategy: Delivering Strategy
CONSISTENT FY15 HALF-YEAR STRATEGY HIGHLIGHTS DELIVERING STRATEGY CUSTOMER AND ROAD INFRASTRUCTURE COMPETITIVE CLEAR MARKET SUSTAINABILITY PARTNER OF CHOICE ADVANTAGE DEFINITION Clear productivity Committed pipeline of TCL core capabilities Urban road networks in benefits delivered developme
Slide 10: FY15 Half-Year Highlights: Operational Activities
FY15 HALF-YEAR HIGHLIGHTS OPERATIONAL ACTIVITIES CUSTOMER AND TOLLING OPERATIONS & MAINTENANCE CORPORATE SAFETY NSW phase 1 roll out of Integration of 495 and 95 Two new executives 95 Express Lanes GLIDe tolling system O&M appointed to TCL Executive completed without completed in 2014; Phase
Slide 11: FY15 Half-Year Highlights: Development Activities
FY15 HALF-YEAR HIGHLIGHTS DEVELOPMENT ACTIVITIES MELBOURNE SYDNEY BRISBANE NORTHERN VIRGINIA CityLink Tulla Widening M5 West Widening QM integration progressing 95 Express Lanes opened construction due to completed on time and well with free cash and in December ahead of commence Oct 2015 bu
Slide 12: Financial Results
FINANCIAL RESULTS ADAM WATSON, CFO
Slide 13: Statutory Results
STATUTORY RESULTS SUMMARY HY15 ($M) HY14 ($M) KEY DRIVERS Toll revenue Toll revenue 738 451 Revenue growth driven by strong traffic growth and EBITDA 181 381 operating performance, and acquisitions of Queensland Motorways and Cross City Tunnel and consolidation of the US business Net profit (loss)
Slide 14: Proportional Results
PROPORTIONAL RESULTS1 SUMMARY KEY DRIVERS HY15 HY15 ($M) ex acquisitions2 HY14 ($M) % CHANGE4 Toll revenue ($M) Queensland assets contributed $124m Toll revenue 761 611 556 9.8% CCT contributed $28m Other assets contributed $55m Fee Feerevenue revenue 62 50 45 10.5% Fee revenue Other Otherreve
Slide 15: Underlying Base Business Performance
UNDERLYING BASE BUSINESS PERFORMANCE PROPORTIONAL EBITDA GROWTH 650 600 63 1 550 112 636 500 4 450 463 459 400 HY14 Proportional Prior Year Non Normalised HY14 Acquisitions (QM & Ownership Increase Existing Business HY15 Underlying EBITDA Recurring CCT) (495) Growth EBITDA 15
Slide 16: Margin Improvement
MARGIN IMPROVEMENT EBITDA MARGIN1 AVERAGE EBITDA MARGIN Basis point H1 FY15 increase CityLink 93.4% 310 Hills M2 85.2% 150 Westlink M7 88.1% 480 M5 South West Motorway 95.1% 110 M1 Eastern Distributor 70.9% 610 Lane Cove Tunnel 65.1% 40 Cross City Tunnel 58.2% N/A Gateway Motorway 80.8% N/A Logan Mo
Slide 17: Cost Management
COST MANAGEMENT PROPORTIONAL COSTS 205 1 3 Additional ED 3 195 12 ownership in maintenance 2 495 net of provision Higher prior prior year lower than year costs Operational Pocahontas pcp owing to associated efficiencies costs no prior year with QM and and 185 longer rectification CCT technology
Slide 18: Free Cash Flow
FREE CASH FLOW FREE CASH FLOW 31 DEC 14 31 DEC 13 % CHANGE Free cash1 $378M $240M 57.5% Weighted average securities eligible for distribution 1,906M 1,486M Free cash per security (cents) 19.8 16.2 22.2% Free cash increase driven by QM distributions ($52m), CCT operating income($20m), higher M7 ter
Slide 19: Funding Update
FUNDING UPDATE SIX MONTH SNAPSHOT •A $125m corporate working capital B •B $2500m drawn debt and D $400m undrawn debt raised C for Queensland Motorways acquisition. $450m of the drawn debt subsequently B refinanced into debt capital markets • C $1270m raised to refinance Westlink M7’s debt facilities
Slide 20: Funding Update: New Debt Diversified, Low Cost & Long Dated
FUNDING UPDATE NEW DEBT1 IS DIVERSIFIED, LOW COST & LONG DATED DIVERSIFIED SOURCES LOWER COST2,3 TENOR EXTENDED2,4 New debt geographically New debt is lower than current New debt is longer than diversified average cost average tenor 31 Dec 31 Dec 31 Dec 31 Dec New debt2 New debt4 2014 20132 20
Slide 21: Capital Funding Requirements
CAPITAL FUNDING REQUIREMENTS FUNDING SOURCES STRATEGY PENDING MATURITIES Diversified funding sources Continuing to diversify where pricing is Hills M2 refinance in progress including bank debt, capital markets favourable Monitoring a range of markets for debt, undrawn bank facilities and E
Slide 22: Market Update
MARKET UPDATE SCOTT CHARLTON, CEO
Slide 23: Melbourne Network
MELBOURNE NETWORK KEY ACTIVITIES CityLink Tulla Widening contractual close reached October 2014 Construction due to commence October 2015 Working with Victorian Government on changes resulting from suspension of East West Link On-going engagement with Victorian Government to further enhance
Slide 24: CityLink Tulla Widening
CITYLINK TULLA WIDENING OVERVIEW EAST WEST LINK IMPACT Extra lanes to add 30% Working with government to more capacity agree on scope of works between Dynon Road and Upgraded Bolte Bridge to Moreland Road (previously West Gate Freeway being delivered as part of connection to improve safety the
Slide 25: Sydney Network
SYDNEY NETWORK KEY ACTIVITIES M5 widening completed December 2014 NorthConnex early work has started with full construction activities scheduled to begin in May 2015 WestConnex (Stage 2) timing and approach to financing to be determined by Government GLIDe tolling system roll-out across Hill
Slide 26: M5 West Widening
M5 WEST WIDENING PROJECT COMPLETED Completed on time and budget mid December 2014 Added 50% capacity to the motorway Traffic returned to 100km/h across all three lanes Truck toll multiplier increase commenced 1 January 2015 – 2.2x to 3x over eight quarters Traffic achieved 150,000 trips in
Slide 27: M5 West Widening: Project Economics
M5 WEST WIDENING PROJECT ECONOMICS Truck toll multiplier Increased from 2.2x to 3x over 8 quarters Traffic uplift Additional 35 lane kilometres Traffic impacts Concession extension During construction Additional 3.3 years to December 2026 Capital costs $400 million includes $50 million NSW Governmen
Slide 28: NorthConnex: Project Economics
NORTHCONNEX PROJECT ECONOMICS Truck toll multiplier and escalation Westlink M7 from 1x to 3x over a two New tolls and concession year period NorthConnex opening Lane Cove Tolls aligned with M2 main toll point Tunnel1 from Approximate 29-year concession to June 2048 2x to 3x over a two year Concessio
Slide 29: Brisbane Network
BRISBANE NETWORK KEY ACTIVITIES QM integration program progressing well and ahead of budget Gateway Upgrade North project: ̶ three tenderers selected ̶ contract to be awarded mid-2015 Legacy Way opening due mid-2015 Assessing road enhancement opportunities on Logan Motorway 29
Slide 30: Queensland Motorways Integration
QUEENSLAND MOTORWAYS INTEGRATION PROGRAM TIMELINE KEY ACTIVITIES 2 JUL 2014 DEC 2014 JUL 2015 JUL 2017 Integration program on track with benefits starting to flow including: Redefined leadership Redefined Integrated team operating model tolling and ̶ reduction in employee Organisation structur
Slide 31: Integration: Logan Motorway
INTEGRATION LOGAN MOTORWAY PAVEMENT RECTIFICATION WORKS Traffic levels improving following completion of Stage 2 rectification works in October 2014 Project scope review under way Future rectification works will be designed to minimise disruption to traffic ENHANCEMENT OPPORTUNITIES Investig
Slide 32: Northern Virginia Network
NORTHERN VIRGINIA NETWORK KEY ACTIVITIES 95 Express Lanes successfully commenced operation December 2014 Network synergies from joint operations and control center with 495 Express Lanes Additional access at Tysons Corner in development by Government Opportunities to prove and extend managed
Slide 33: 95 Express Lanes
95 EXPRESS LANES PERFORMANCE 95% E-ZPass penetration1 33% high occupancy vehicle usage, in line with expectations1 AM peak starts earlier and lasts longer on 95 than 495: ̶ approximately 3x the trip volume between 5.00am and 7.00am ̶ an additional hour of AM peak trip volume2 compared to 495
Slide 34: 495 Express Lanes
495 EXPRESS LANES TRAFFIC & REVENUE GROWTH New record for highest revenue achieved in a day – $200,767 (2 December 2014) New record for highest toll - USD$14.55 (9 December 2014) Increased customer value and synergies across integrated network 48,000 new customers on 495 in December, an incr
Slide 35: Outlook
OUTLOOK STRATEGIC OBJECTIVES CAPITAL STRATEGY OUTLOOK Further network development Strong support from lenders to Distribution guidance upgraded opportunities in all markets finance development projects to 39.5 cents for FY15 Significant opportunities from Diversification of funding Upgra
Slide 36: Appendix 1
transurban Y a, ae ae APPENDIX 1 =n > F
Slide 37: Reconciliation
RECONCILIATION KEY CHANGES TO ACCOUNTING FOR ASSETS VERSUS THE PRIOR CORRESPONDING PERIOD TRANSURBAN Financial close on the acquisition of QM occurred 2 July 2014. The results of the Transurban Queensland are included from that date with no contribution QUEENSLAND (QM) in the prior corresponding per
Slide 38: Reconciliation: Free Cash
RECONCILIATION FREE CASH FREE CASH CALCULATION SOURCE OF INFORMATION/EXPLANATION Cash flows from operating activities before transaction and integration cash Statutory Transurban Holdings Limited cash flow excluding transactions costs and integration related cash payments incurred on the acquisition
Slide 39: Appendix 2: Detailed Financials
APPENDIX 2 DETAILED FINANCIALS
Slide 40: Statutory Results
STATUTORY RESULTS HALF-YEAR TO 31 DECEMBER 2014 31 DEC 14 ($M) 31 DEC 13 ($M) % CHANGE Toll revenue 738 451 63.7% Fee and other revenue 71 47 49.8% Construction revenue 152 54 183.4% Business development & other revenue 3 20 (81.0%) Total revenue 964 572 68.6% Road operating costs (176) (113) 55.6%
Slide 41: Proportional Results
PROPORTIONAL RESULTS HALF-YEAR TO 31 DECEMBER 2014 31 DEC 14 ($M) 31 DEC 13 ($M) % CHANGE Toll revenue 761 556 36.7% Fee and other revenue 71 58 23.0% Total revenue 832 614 35.4% Operating costs (172) (129) 33.6% Business development costs (2) (5) (58.3%) Corporate costs (22) (17) 28.3% Total costs
Slide 42: Result by Asset – 100%
RESULT BY ASSET – 100% CONSOLIDATED ASSETS – 31 DECEMBER 2014 ($ MILLIONS) CITYLINK ROAM TOLLING & (VICTORIA) HILLS M2 LANE COVE TUNNEL CROSS CITY TUNNEL M1 ED TOLLAUST TOTAL NSW Toll revenue 289 110 38 28 56 - 232 Fee & other revenue 28 3 2 1 2 14 22 Total revenue 317 113 40 29 58 14 254 Total cost
Slide 43: Result by Asset – 100%
RESULT BY ASSET – 100% CONSOLIDATED ASSETS – 31 DECEMBER 2014 ($ MILLIONS) 495 95 GATEWAY LOGAN GO BETWEEN TOTAL EXPRESS EXPRESS CORP TOTAL CONSOL MOTORWAY MOTORWAY CLEM7 BRIDGE CORP QLD QUEENSLAND LANES LANES DRIVe US TOTAL US OTHER GROUP Toll revenue 95 73 24 6 - 198 19 - - - 19 - 738 Fee & other
Slide 44: Result by Asset – 100%: Equity Assets
RESULT BY ASSET – 100% EQUITY ASSETS – 31 DECEMBER 2014 ($ MILLIONS) M5 SOUTH WEST MOTORWAY WESTLINK M7 TOTAL Toll revenue 98 127 225 Fee & other revenue 10 3 13 Total revenue 108 130 238 Total cost (15) (18) (33) EBITDA 93 112 205 EBITDA margin 95.1% 88.1% 91.1% Depreciation & amortisation (38) (34
Slide 45: Reconciliation: Statutory Income Statement to EBITDA
RECONCILIATION STATUTORY INCOME STATEMENT TO EBITDA – 31 DECEMBER 2014 ($ MILLIONS) OFFSET CONSTRUCTION 100% ACCOUNTING REALLOCATION CONSOLIDATED NET BUSINESS DISCLOSURE UNDER OF CAPITALISED SIGNIFICANT ASSETS DEVELOPMENT AASB I 12 COSTS ITEMS STATUTORY P&L Toll revenue 738 - - - - 738 Fee & other r
Slide 46: Reconciliation: Statutory EBITDA to Proportional EBITDA
RECONCILIATION STATUTORY EBITDA TO PROPORTIONAL EBITDA 31 DEC 14 ($M) 31 DEC 13 ($M) % CHANGE Statutory EBITDA 181 381 (52.5%) Less: EBITDA attributable to Non-controlling interest - Eastern Distributor (10) (9) (16.2%) Less: EBITDA attributable to Non-controlling interest - 495 Express Lanes (1) -
Slide 47: Result by Asset – 100%: December 2013
RESULT BY ASSET – 100% CONSOLIDATED ASSETS – 31 DECEMBER 2013 ($ MILLIONS) LANE COVE M1 EASTERN ROAM TOLLING CITYLINK HILLS M2 TUNNEL DISTRIBUTOR AND TOLLAUST OTHER TOTAL Toll revenue 269 94 35 53 - - 451 Fees and other revenue 26 3 2 1 13 20 65 Total revenue 295 97 37 54 13 20 516 Total cost (52) (
Slide 48: Result by Asset – 100%: Equity Assets 2013
RESULT BY ASSET – 100% EQUITY ASSETS – 31 DECEMBER 2013 ($ MILLIONS) M5 SOUTH WEST POCAHONTAS 495 EXPRESS MOTORWAY WESTLINK M7 895 LANES DRIVE TOTAL Toll revenue 93 115 9 12 - 229 Fee and other revenue 9 2 - 3 - 14 Total revenue 102 117 9 15 - 243 Total cost (14) (22) (3) (19) (3) (61) EBITDA 88 95
Slide 49: Reconciliation: Statutory Income Statement to EBITDA 2013
RECONCILIATION STATUTORY INCOME STATEMENT TO EBITDA – 31 DECEMBER 2013 ($ MILLIONS) 100% OTHER OFFSET CONSTRUCTION REALLOCATION CONSOLIDATED REVENUE NET BUSINESS ACCOUNTING DISCLOSURE OF CAPITALISED STATUTORY ASSETS REALLOCATION DEVELOPMENT UNDER AASB I 12 COSTS P&L Toll revenue 451 - - - - 451 Fee
Slide 50: Free Cash Flow
FREE CASH FLOW 31 DEC 14 31 DEC 13 % ($M) ($M) CHANGE Cash flows from operating activities before transaction and integration cash payments 379 227 67.0% Less transaction and integration cash payments from non 100 per cent owned entities (406) - (100.0%) Cash flows from operating activities (refer G
Slide 51: Reconciliation of Free Cash
RECONCILIATION OF FREE CASH 31 DEC 14 31 DEC 13 % CHANGE ($M) ($M) Proportional EBITDA 636 463 37.4% Adjusted for proportional: Maintenance provision 33 24 34.8% Operating and working capital movements (3) (18) (84.9%) Non-cash items (11) (7) 64.2% Net interest paid (233) (214) 8.7% Tax paid (13) (1
Slide 52: Maintenance Provision Reconciliation
MAINTENANCE PROVISION RECONCILIATION ADDITIONAL MAINTENANCE PROVISION 31 DEC 14 31 DEC 13 31 DEC 14 31 DEC 13 CASH SPEND RECOGNISED DURING THE YEAR ($M) ($M) ($M) ($M) CityLink 7 7 CityLink (3) (5) Hills M2 3 2 Hills M2 (3) 1 Lane Cove Tunnel 3 3 Lane Cove Tunnel (2) - Cross City Tunnel 3 - Cross Ci
Slide 53: Net Finance Costs Paid
NET FINANCE COSTS PAID 31 DEC 14 ($M) 31 DEC 13 ($M) NET INTEREST NET INTEREST NET INTEREST NET INTEREST PAID (100%) PAID (PROP) PAID (100%) PAID (PROP) CityLink (12) (12) (15) (15) Hills M2 (24) (24) (22) (22) Lane Cove Tunnel (5) (5) (6) (6) Cross City Tunnel (3) (3) - - M1 ED – Other (16) (12) (2
Slide 54: Appendix 3: Detailed Treasury and Funding
APPENDIX 3 DETAILED TREASURY AND FUNDING
Slide 55: Funding Structure
FUNDING STRUCTURE Transurban DRAWN DEBT1 Asset Debt Corporate Debt (Non-Recourse) Australia USA Capital Markets Bank Debt M2 495 Express Lanes 95 Express Lanes AMTN Term Debt A$0.7bn A$0.8bn A$0.1bn US$0.1bn M5 Cross City Tunnel PABs PABs EMTN A$0.7bn A$0.3bn US$0.2bn US$0.2bn €1.1bn Working Capital
Slide 56: Group Debt at 31 December 2014
GROUP DEBT AT 31 DECEMBER 2014 CORPORATE DRAWN DEBT AUD ($ MILLION) USD ($ MILLION) Working capital lines1 130 251 1. A$850m facilities. A$398m available after deducting A$26m letters of credit issued and converting US$ at the spot exchange rate ($0.8202 at 31 December 2014). Where drawings under a
Slide 57: Total Group Drawn Debt
TOTAL GROUP DRAWN DEBT Proportional basis 31 DEC 2014 30 JUNE 2014 MOVEMENT EXPLANATION3 AUD1 ($M) ($M) ($M) A$833 million Euro Notes raised and used to prepay A$375 million term debt. A$136 million US private Corporate 3,721 3,268 453 placement repaid with remaining proceeds. A$130 million in worki
Slide 58: Key Debt Metrics
KEY DEBT METRICS 31 DECEMBER 2014 30 JUNE 2014 TRANSURBAN NON TRANSURBAN NON GROUP CORPORATE RECOURSE GROUP CORPORATE RECOURSE Weighted average maturity (years)1 7.6 yrs 4.8 yrs 9.2 yrs 7.5 yrs 3.9 yrs 10.4 yrs Weighted average cost of AUD debt2 5.7% 6.2% 5.3% 6.3% 6.4% 6.2% Weighted average cost of
Slide 59: Corporate Debt Maturities
CORPORATE DEBT MATURITIES BY FINANCIAL YEAR – AS AT 31 DECEMBER 2014 1. Debt is shown in the financial year in which it matures. 2. Debt values are in A$ as at 31 December 2014. C$, Euro and US$ debt are converted at the hedged rate where cross currency swaps are in place. Unhedged US$ debt is conve
Slide 60: Asset Debt Maturities
ASSET DEBT MATURITIES BY FINANCIAL YEAR – AS AT 31 DECEMBER 2014 1. The full value of debt facilities is shown as this is the value of debt for refinancing purposes. This overstates Transurban’s ownership share of the debt. 2. Debt is shown in the financial year in which it matures. 3. US$ debt is c
Slide 61: Appendix 4: Portfolio Summary
APPENDIX 4 PORTFOLIO SUMMARY
Slide 62: Operating Asset Portfolio
OPERATING ASSET PORTFOLIO SUMMARY STATISTICS M5 SOUTH WEST M1 EASTERN CROSS CITY CITYLINK HILLS M2 WESTLINK M7 LANE COVE TUNNEL MOTORWAY DISTRIBUTOR TUNNEL OVERVIEW VIC NSW NSW NSW NSW NSW NSW Opening date Dec 2000 Aug 1992 May 1997 Dec 1999 Dec 2005 Mar 2007 Aug 2005 Concession period from financia
Slide 63: Operating Asset Portfolio
OPERATING ASSET PORTFOLIO SUMMARY STATISTICS GO BETWEEN LEGACY 495 EXPRESS 95 EXPRESS GATEWAY LOGAN CLEM7 BRIDGE WAY LANES LANES OVERVIEW QLD QLD QLD QLD QLD USA USA Opening date Dec 1986 Dec 1988 Mar 2010 July 2010 Q4FY15 Nov 2012 Jan 2015 Concession period from financial close 37 years 37 years 37
Slide 64: Tolling Escalation
TOLLING ESCALATION EMBEDDED INFLATION PROTECTION MOTORWAY ESCALATION1 CityLink Escalated quarterly by the greater of quarterly CPI or 1.1065% (being 4.5% p.a. as a quarterly compound rate) for the first 15 years, then quarterly by CPI. This is subject to a cap of annual CPI plus 2.5%, which cannot b
Slide 65: Summarised Group Structure
SUMMARISED GROUP STRUCTURE STAPLED STRUCTURE TRANSURBAN HOLDINGS LIMITED TRANSURBAN HOLDING TRUST TRANSURBAN INTERNATIONAL LIMITED ROAD/OPERATING CORPORATE ENTITIES ROAD/OPERATING ENTITIES OTHER ENTITIES CORPORATE ENTITIES ENTITIES Including: Companies operating and maintaining roads Trusts holding
Slide 66: FY15 Half-Year Results
FY15 HALF-YEAR RESULTS 12 FEBRUARY 2015