Transurban Group Ltd. · ASX:TCL
Transurban — Investor Presentation (August 2018)
70 slides from Transurban's investor presentation, Aug 7, 2018
Slide 1: Results for FY18
Results for FY18 7 August 2018
Slide 2: Disclaimer and basis of preparation
Disclaimer and 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
Slide 3: Highlights
Highlights • FY19 distribution guidance of 59.0 cps • FY19 distribution guidance of 59.0 cps will be maintained in the event of a successful WestConnex bid 8.7% 10.2% TOLL REVENUE EBITDA EBITDA • Strong distribution growth in FY18 whilst raising $1.9 billion of equity GROWTH GROWTH1 1 GROWTH to supp
Slide 4: FY18 performance
FY18 performance 40.4% 33.3% 16.8% 9.5% Segment and toll SYDNEY MELBOURNE BRISBANE NORTH AMERICA1 revenue contribution Toll revenue growth2 8.3% 13.4% 2.1% 7.1% EBITDA growth2 9.1% 15.7% 4.0% 12.4% 1.4% ADT growth 3.1% 2.6% 1.9%3 (QoQ: 4.7%, 8.7% large vehicles) Capital invested / $2.3 billion $5.1
Slide 5: Transurban distribution growth
Transurban distribution growth • Strong distribution growth in FY18 whilst raising $1.9 billion of equity to support the West Gate Tunnel Project, delivering long term value to stakeholders • Free cash flow coverage for FY18 of 101.4% • FY19 distribution guidance of 59.0 cps • FY19 distribution guid
Slide 6: $10 billion committed pipeline
$10 billion committed pipeline1 FY19 FY20 FY21 FY22 FY23 COMMITTED INNER CITY BYPASS Brisbane ($37.5 million) PROJECTS/ PROJECTS UNDER CONSTRUCTION2 LOGAN ENHANCEMENT PROJECT Brisbane ($320 million) 395 EXPRESS LANES GWA (US$475 million) NORTHCONNEX3 Sydney ($1.3 billion) WEST GATE TUNNEL PROJECT Me
Slide 7: Potential next generation opportunities
Potential next generation opportunities FY19 FY20-22 FY23-25 FY26-28 FY29+ WESTCONNEX1 STAGE 1B Sydney STAGE 2 Sydney STAGE 3A Sydney STAGE 3B Sydney POTENTIAL ENHANCEMENTS1 495 EXPRESS LANES NORTHERN EXTENSION2 North America M1 UPGRADE (NORTH AND SOUTH)2 Brisbane CENTENARY/WESTERN MOTORWAY UPGRADE2
Slide 8: Disciplined approach to investment
Disciplined approach to investment Applying discipline Valuation discipline Discipline demonstrated in both project selection • Alignment of interest as long-term owner-operator and valuation approach when participating in bidding processes • Through-the-cycle approach to assumptions • Traffic forec
Slide 9: Strategy
Strategy Operations Customer experience To be the partner of choice with Technology governments, providing effective and innovative urban road infrastructure and services utilising core capabilities Development / delivery Community engagement Network planning / forecasting TRANSURBAN FY18 RESULTS |
Slide 10: Capabilities underpinning strategy
Capabilities underpinning strategy • Multi-disciplinary team with industry- • Supporting and developing tolling Network planning leading expertise systems, customer experience Technology platforms, operational security and / forecasting • Team of network planners and traffic modellers corporate syst
Slide 11: Delivering outcomes with government partners
Delivering outcomes with government partners Monash Freeway Inner City Bypass (ICB) Upgrade (MFU) Upgrade • Stage 1 of the MFU • Transurban Queensland (TQ) added new lanes to is project managing and the Monash Freeway financing the delivery of between EastLink and $60 million ICB upgrade Clyde Road
Slide 12: Customer focus
Customer focus Linkt tolling brand, now active across Sydney, Melbourne and Brisbane Customer service Enhanced offerings Digital experience Customer insights • Expanding customer service • Simpler and easier retail fees • Making it easier for • Voice of Customer program channels and reduced administ
Slide 13: Environment, Social and Governance
Environment, Social and Governance Sustainability People & Culture Sustainable procurement Innovation Partnership • Received Employer of Choice for Gender Equality award for • Aligning practices with Sustainable • Working with Banksia fourth year in a row Procurement (ISO 20400) Foundation to signif
Slide 14: Connected Automated Vehicle (CAV) trials
Connected Automated Vehicle (CAV) trials Melbourne GWA Three-phase program in partnership with Victorian Trials in partnership with Government, VicRoads and RACV Federal Highway Administration and Virginia Phase One Department of • How partially automated vehicles react Transportation to motorways i
Slide 15: From concessionaire to integrated transport company
From concessionaire to integrated transport company CORE BUSINESS LONG-TERM SUSTAINABILITY • Operating in five urban markets • Investing in improved experiences for customers • Inflation-linked revenue through fee restructuring, and service offerings to • Traffic growth through economic cycles give
Slide 16: Financial results
Financial results
Slide 17: Statutory results
Statutory results FY17 ($M) FY18 ($M) KEY DRIVERS • $162 million increase from existing assets driven by traffic growth and toll price Toll revenue 2,083 2,249 Toll revenue escalation across the Australian and GWA assets • $4 million contribution from A25 since Financial Close on 5 June 2018 • $140
Slide 18: Proportional results
Proportional results FY17 ($M) FY18 ($M) % CHANGE KEY DRIVERS • $182 million increase from existing assets driven by traffic growth and toll price escalation Toll revenue1 2,153 2,340 8.7% Toll revenue • $5 million contribution from A25 since Financial Close on 5 June 20182 Other revenue3 51 56 8.6%
Slide 19: EBITDA margins
EBITDA margins¹ FY16 FY17 FY18 • EBITDA margin expansion across all regions for FY18 Sydney 79.7% 80.5% 81.1% • Melbourne EBITDA margin increase due to increases in toll revenue from large vehicle toll multipliers Melbourne 85.5% 86.5% 88.2% • Margin growth for Brisbane tracking in line with expecta
Slide 20: Cost movement
Cost movement Cost increases to support growth in underlying business operations +4.5% +4.2% Cost movement for the period driven by (14) 3 (3) 599 600 • Cost discipline across all 1 38 segments • Ongoing investment in core capabilities (e.g. customer 575 initiatives) • Continual in-housing of asset
Slide 21: Free cash flow movement
Free cash flow movement +16.2% 1,220 1,215 FCF coverage 14 (12) 11 FCF coverage for FY18 is 101.4%2 46 1,174 Net Finance Cost Includes $21 million increase in FCF due to PABs premium (174) as part of the 395 Express Lanes project debt raise, Distributions interest income from proceeds following Dece
Slide 22: Funding growth opportunities
Funding growth opportunities Positioned to fund growth opportunities FY18 DEBT CAPITAL MARKET ISSUANCES (TOTAL $2.2B) • Continue to maintain a balanced mix of debt/equity funding to support strong investment grade credit metrics Market Tenor • Minimal FY19 debt maturities require refinancing USD NOT
Slide 23: Market updates
——_ - rf : ee aaa ; —— 5 3 ig a eee —— —_—_ Market updates
Slide 24: Sydney
Sydney TRANSURBAN FY18 RESULTS | 7 AUGUST 2018 24
Slide 25: Sydney
Sydney Operations NORTHCONNEX • Six-month trial closure of the Cleveland Street • Majority of tunnelling completed with off-ramp showed a 4% improvement in excavation of the top heading 99% complete weekday motorway speeds and travel time • Delivery timeframe is currently under review. benefits alon
Slide 26: WestConnex
WestConnex TRANSURBAN FY18 RESULTS | 7 AUGUST 2018 26
Slide 27: WestConnex
WestConnex Process • Participating in bid with AustralianSuper, CPPIB and Tawreed Investments Limited • Bid to acquire a 51% equity stake in WestConnex from the NSW Government submitted in July 2018 • Transurban’s bid is conditional on approvals from the Australian Competition and Consumer Commissio
Slide 28: Melbourne
Melbourne TRANSURBAN FY18 RESULTS | 7 AUGUST 2018 28
Slide 29: Melbourne
Melbourne Operations WEST GATE TUNNEL PROJECT1 • Six-month 100km/h dynamic speed trial commenced in March on Western Link • Over 2,000 workers on the • Transurban's incident response services extended beyond project CityLink to WGTP construction areas between • Planning scheme Williamstown Road and
Slide 30: Brisbane
Brisbane TRANSURBAN FY18 RESULTS | 7 AUGUST 2018 30
Slide 31: Brisbane
Brisbane Operations LOGAN ENHANCEMENT PROJECT • AirportlinkM7 operations insourced as part of broader tunnel integration program • Total project cost of $512 million, increasing capacity and • New O&M contract executed on open road assets with safety in key areas of the Logan Motorway Gateway Motorw
Slide 32: North America
North America TRANSURBAN FY18 RESULTS | 7 AUGUST 2018 32
Slide 33: North America
North America Greater Washington Area MONTREAL, QUEBEC Operations Delivery and projects Integration • Successful integration and operation of • 395 Express Lanes construction • Integration activities to be performed by combined two-mile extension to the southern end expected to be completed in FY20
Slide 34: Outlook
Outlook Continued improvements to enable fee reduction and enhanced digital platforms for customers Strong balance sheet to fund existing $10 billion pipeline FY19 distribution guidance of 59.0 cps; will be maintained in the event of From concessionaire a successful WestConnex bid to integrated tran
Slide 35: Supplementary information
Supplementary 1. Detailed financials 2. Treasury information 3. Corporate overview 4. Glossary
Slide 36: Detailed financials
Detailed financials Supplementary information
Slide 37: Traffic and revenue performance
Traffic and revenue performance JUN 18 QUARTER1 FY181 PROPORTIONAL PROPORTIONAL TOLL REVENUE (AUD) ADT TOLL REVENUE (AUD) ADT % CHANGE % CHANGE % CHANGE % CHANGE Sydney 6.9% 3.3% 8.3% 3.1% Melbourne 8.6% 4.7% 13.4% 1.4% Brisbane 0.4% 1.5% 2.1% 2.6% North America 2.7% 0.5% 7.1% 1.9% 1. Compared to pr
Slide 38: Traffic and revenue data
Traffic and revenue data¹ JUNE 17 JUNE 18 ASSET QUARTER QUARTER % CHANGE FY17 FY18 % CHANGE Sydney M2 Total Toll Revenue ($M) $71 $77 8.1% $277 $301 8.7% Average Daily Trips (‘000) 130 135 3.9% 129 133 3.2% LCT Total Toll Revenue ($M) $24 $25 5.6% $93 $100 6.8% Average Daily Trips (‘000) 90 93 3.7%
Slide 39: Traffic and revenue data
Traffic and revenue data¹ JUNE 17 JUNE 18 ASSET QUARTER QUARTER % CHANGE FY17 FY18 % CHANGE Brisbane Gateway Motorway Total Toll Revenue ($M) $55 $55 0.4% $219 $220 0.4% Average Daily Trips (‘000) 115 117 1.6% 115 117 1.4% Logan Motorway Total Toll Revenue ($M) $46 $46 (1.1%) $183 $185 1.4% Average
Slide 40: Proportional toll revenue by asset
Proportional toll revenue by asset JUNE 18 QUARTER ($M) FY18 ($M) OWNERSHIP 100% PROPORTIONAL 100% PROPORTIONAL M2 100.0% $77 $77 $301 $301 LCT 100.0% $25 $25 $100 $100 CCT 100.0% $17 $17 $67 $67 ED 75.1% $37 $27 $146 $110 M7 50.0% $110 $55 $438 $219 M5 50.0% $73 $37 $287 $144 CityLink 100.0% $199 $
Slide 41: Statutory results
Statutory results FY17 ($M) FY18 ($M) Toll revenue 2,083 2,249 Construction revenue 592 989 Other revenue 57 60 Total revenue 2,732 3,298 Employee benefit expense (168) (180) Road operating costs (335) (326) Construction costs (592) (989) Transaction and integration costs (5) (21) Corporate/other ex
Slide 42: Proportional results
Proportional results PROPORTIONAL EARNINGS FY17 ($M) FY18 ($M) % CHANGE Toll revenue 2,153 2,340 8.7% Other revenue1 51 56 8.6% Total revenue 2,204 2,396 8.7% Total costs1 (575) (600) 4.5% EBITDA (excluding significant items) 1,629 1,796 10.2% Significant items – (21) n/m EBITDA 1,629 1,775 8.9% REC
Slide 43: FY18 proportional result by asset
FY18 proportional result by asset NET FINANCE INCOME TAX TOLL OTHER COST (EXP) / REVENUE REVENUE EBITDA D&A EXPENSE NPBT BENEFIT NPAT OWNERSHIP ASSET $M $M $M $M $M $M $M $M 100.0% M2 301 2 255 (74) (36) 145 9 154 100.0% LCT 100 – 65 (21) (29) 15 (4) 11 100.0% CCT 67 – 44 (24) (10) 10 (1) 9 75.1% ED
Slide 44: FY17 proportional result by asset
FY17 proportional result by asset NET FINANCE INCOME TAX TOLL OTHER COST (EXP) / REVENUE REVENUE1 EBITDA D&A EXPENSE NPBT BENEFIT NPAT OWNERSHIP ASSET $M $M $M $M $M $M $M $M 100.0% M2 277 3 236 (74) (32) 130 12 142 100.0% LCT 93 – 58 (21) (30) 7 (8) (1) 100.0% CCT 63 – 39 (24) (12) 3 – 3 75.1% ED 1
Slide 45: FY18 net finance costs paid
FY18 net finance costs paid NON-CASH ITEMS CONCESSION PAYMENTS & STATUTORY MAINTENANCE NET PROPORTIONAL NET DEBT PROVISION INTEREST INTEREST INTEREST NET INTEREST OWNER INTEREST FEES UNWIND CAPITALISATION OTHER1 ACCRUALS2 PAID PAID CONTROLLED ENTITIES -SHIP $M $M $M $M $M $M $M $M CityLink 100.0% (3
Slide 46: FY17 net finance costs paid
FY17 net finance costs paid NON-CASH ITEMS CONCESSION PAYMENTS & STATUTORY MAINTENANCE NET PROPORTIO-NAL NET DEBT PROVISION INTEREST INTEREST INTEREST NET INTEREST OWNER INTEREST FEES UNWIND CAPITALISATION ACCRUALS1 PAID PAID CONTROLLED ENTITIES -SHIP $M $M $M $M $M $M $M CityLink 100.0% (24) – 5 –
Slide 47: Maintenance provision
Maintenance provision¹ MAINTENANCE MAINTENANCE 2 EXPENSE RECOGNISED CASH SPEND FY17 ($M) FY18 ($M) FY17 ($M) FY18 ($M) CityLink (14) (6) (11) (11) M2 (2) (5) (4) (3) LCT (8) (6) (6) (4) CCT (8) (6) (4) (5) ED (7) (8) (7) (6) M7 (10) (11) (13) (29) M5 (4) (3) (1) (2) Gateway Motorway (9) (10) (7) (4)
Slide 48: Free cash calculation
Free cash calculation FREE CASH CALCULATION SOURCE OF INFORMATION/EXPLANATION Cash flows from operating activities Statutory Transurban Holdings Limited operating cash flow (includes cash inflow from M5 TLNs). (refer Group Statutory accounts) Add back transaction and integration costs Transaction an
Slide 49: Free cash flow
Free cash flow RECONCILIATION OF STATUTORY CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FY17 ($M) FY18 ($M) FREE CASH FLOW FY17 FY18 % CHANGE Cash flows from operating activities 837 1,053 Free cash $1,220M $1,215M (0.5%) Add back transaction and integration costs related to Weighted average sec
Slide 50: Reconciliation of proportional EBITDA to free cash
Reconciliation of proportional EBITDA to free cash FY18 ($M) Comments Proportional EBITDA 1,775 Refer to slide 42 for further detail Proportional net finance (542) Refer to slide 45 for further detail costs paid (cash) Add back proportional maintenance 35 Refer to slide 47 for further detail expense
Slide 51: Treasury
Treasury Supplementary information
Slide 52: Funding structure at June 2018
Funding structure at 30 June 2018 Transurban3 BBB+/Baa1/A- Non- Recourse Corporate North Sydney Brisbane America Working EMTN capital2 495 Express 95 Express €2.1B M2 LCT CCT ED3 M73 M53 TQ3 A25 A$1.7B Lanes Lanes3 Letter of Maple -/A3/A- -/A3/A- BBB/-/- BBB/-/BBB Credit C$0.3B A$0.5B AUD PP A$0.3B
Slide 53: Group debt at June 2018
Group debt at 30 June 2018 FACILITY FACILITY FACILITY TOTAL FACILITY TOTAL DRAWN PROPORTIONAL STATUTORY (US$M)1 (C$M)1 ($M)1 ($M) ($M) DRAWN ($M) DRAWN ($M)2 CORPORATE DEBT3 Working capital facilities4 – – 1,650 1,650 – – – USPP 162 – 774 993 993 993 987 EMTN (CAD, NOK and EUR Notes) 305 – 3,037 3,4
Slide 54: Drawn debt
Drawn debt¹ 30 JUN 17 30 JUN 18 MOVEMENT AUD2 ($M) ($M) ($M) EXPLANATION Corporate 4,330 4,613 283 Maturity of A$165 million USPP and A$300 million AMTN. A$749 million Euro MTN issuance. Net A$5 million increase in proportional M7 debt as a result of USPP issuance and term bank repayment. Hills M2 d
Slide 55: Key debt metrics
Key debt metrics 30 JUNE 2017 30 JUNE 2018 TRANSURBAN NON- TRANSURBAN NON- GROUP CORPORATE RECOURSE GROUP CORPORATE RECOURSE Weighted average maturity (years)1,2 9.0 years 5.8 years 10.7 years3 9.2 years 5.9 years 10.8 years4 Weighted average cost of AUD debt1,5 4.9% 5.5% 4.5% 4.9% 5.5% 4.5% Weighte
Slide 56: Extension of Group debt maturity profile
Extension of Group debt maturity profile June 2017 maturity profile1,2,3 7,000 6,000 Existing debt 5,000 refinanced during $A MILLION 4,000 FY18 3,000 2,000 1,000 - FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 - 29 FY30 - 34 FY35+ June 2018 maturity profile1,2,3 7,000 6,000 New debt raised during FY
Slide 57: Corporate debt maturities
Corporate debt maturities at 30 June 2018 Working capital facilities USPP EMTN 144A Letters of credit 2,000 1,800 1,600 225 1,400 1,200 A$ MILLION 746 1,000 811 800 600 206 219 915 733 400 321 833 866 233 706 200 360 375 254 219 94 - FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 F
Slide 58: Non-recourse debt maturities
Non-recourse debt maturities at 30 June 2018 TQ M2 M7 M5 CCT ED LCT 495 95 A25 2,000 4 1,800 20 1,600 278 497 82 1,400 179 1,200 A$ MILLION 200 350 1,000 383 100 800 4 98 535 643 1,365 4 166 108 600 160 90 40 408 60 947 888 400 400 225 100 320 116 474 100 200 440 406 3 293 20 250 279 277 200 200 200
Slide 59: Hedging profile
Hedging profile • 98.5% of debt is interest rate TRANSURBAN INTEREST RATE HEDGING PROFILE1 hedged as at 30 June 2018 20,000 • Hedge tenor is matched to the tenor of the debt on 97%2 of drawn debt 18,000 • All foreign currency debt issued by North America Sydney Brisbane Corporate Fixed amount 16,000
Slide 60: Diversification of funding sources
Diversification of funding sources Debt funding activities Major debt issuances1 during FY18: JUN 17 GROUP DEBT2 JUN 18 GROUP DEBT2 BANK DEBT • A$749 million corporate EUR notes AMTN • A$1,650 million corporate syndicated AUD PRIVATE PLACEMENT working capital facility CAD NOTES • A$200 million M7 US
Slide 61: Corporate overview
Corporate overview Supplementary information
Slide 62: Summarised Group structure
Summarised Group structure TRANSURBAN HOLDINGS LIMITED TRANSURBAN HOLDING TRUST TRANSURBAN INTERNATIONAL LIMITED CORPORATE ENTITIES ROAD/OPERATING ENTITIES OTHER ENTITIES ROAD/OPERATING ENTITIES CORPORATE ENTITIES Including: Companies operating and maintaining roads Trusts holding asset and financin
Slide 63: Asset portfolio at June 2018
Asset portfolio at 30 June 2018 MELBOURNE SYDNEY OVERVIEW CITYLINK WGT M5 M2 ED M7 NCX LCT CCT Under Under Opening date Dec 2000 Aug 1992 May 1997 Dec 1999 Dec 2005 Mar 2007 Aug 2005 construction construction Remaining concession period 17 years 22 years2 8 years 30 years 30 years 30 years 28 years3
Slide 64: Asset portfolio at June 2018
Asset portfolio at 30 June 2018 BRISBANE NORTH AMERICA GATEWAY LOGAN GO BETWEEN LEGACY AIRPORTLINK 495 EXPRESS 95 EXPRESS OVERVIEW CLEM7 A255 MOTORWAY MOTORWAY BRIDGE WAY M7 LANES LANES4 Opening date Dec 1986 Dec 1988 Mar 2010 Jul 2010 Jun 2015 Jul 2012 Nov 2012 Dec 2014 May 2011 Remaining 33 years
Slide 65: Tolling escalation
Tolling escalation EMBEDDED INFLATION PROTECTION MOTORWAY ESCALATION M2 Tolls escalate quarterly by the greater of quarterly CPI or 1% LCT Car tolls escalate quarterly by quarterly CPI. Large vehicle tolls escalate quarterly by the greater of quarterly CPI or 1% CCT Tolls escalate quarterly by the g
Slide 66: Transurban operates in a regulated environment
Transurban operates in a regulated environment CONCESSION DEEDS INDEPENDENT REGULATION LIGHT HANDED MONITORING Example Toll roads Utilities including electricity, water, Airports, railway and some ports industries gas Pricing Australian tolls fixed from date of concession Prices reset periodically (
Slide 67: Safety
Safety FY18 RESULTS TRANSURBAN RICI1 • Slight reduction in Road Injury Crash Index (RICI) was recorded1 7 • Tragically there were two fatalities on our major projects ‒ In August 2017 an employee of our contractor on the 395 Express 6 Lanes project was fatally injured 5 ‒ In June 2018 an employee of
Slide 68: Glossary
Glossary Supplementary information
Slide 69: Glossary
Glossary TERM DEFINITION TERM DEFINITION 1H/2H First or second half of a financial year FREE CASH/FCF Free cash is calculated as statutory cash flows from operating activities from 100% owned subsidiaries plus distributions and interest received from non-100% owned subsidiaries, adjusted ADT Average
Slide 70: Glossary
Glossary TERM DEFINITION TERM DEFINITION NPAT and NPBT Net Profit After Tax and Net Profit Before Tax TOLL REVENUE Toll revenue includes revenue from customers, specifically tolls, service and fee revenue NWRG NorthWestern Roads Group TOLLAUST Service provider including O&M and retail services to NS
Transurban Group — Investor Presentation (August 2018) on 6ix