Transurban Group Ltd. · ASX:TCL
Transurban — FY2015 Earnings Presentation
53 slides from Transurban's earnings presentation, Aug 11, 2015
Slide 1: FY15 Results
FY15 RESULTS) 11 AUGUST 2015 EE —
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: Year in Review
transurban § YEAR IN REVIEW | Se oe ee == WL)
Slide 4: FY15 Highlights
FY15 HIGHLIGHTS FY15 FINANCIAL RESULTS TOLL REVENUE GROWTH EBITDA GROWTH1 ` FY15 DISTRIBUTION 39.6% 38.0% 40.0₵ FY15 ADJUSTED RESULTS EXCLUDING ACQUISITIONS2 AND 95 EXPRESS LANES3 TOLL REVENUE GROWTH EBITDA GROWTH ADT GROWTH 10.7% 13.1% 5.0% 1. Excludes significant items relating to the QM acquisiti
Slide 5: Distribution Growth
DISTRIBUTION GROWTH FY15 distribution of 40.0 cps − 7.0 cps fully franked component − 100.5 per cent free cash covered − final FY15 distribution of 20.5 cps to be paid 14 August 2015 FY16 distribution guidance of 44.5 cps − approximately 100 per cent free cash covered 22.0₵ 24.0₵ 27.0₵ 29.5₵ 31.
Slide 6: FY15 Network Performance
FY15 NETWORK PERFORMANCE TOLL REVENUE TOLL ADT EBITDA EBITDA NETWORK HIGHLIGHTS CONTRIBUTION REVENUE (AUD) GROWTH GROWTH MARGIN GROWTH Traffic growth continuing to benefit from additional capacity Sydney1 delivered through widening and ramp projects Truck toll multipliers increased on LCT, M5 an
Slide 7: FY15 Safety Highlights
FY15 SAFETY HIGHLIGHTS ROAD INJURY CRASH INDEX (RICI)2 COMPARISON 25 HIGHLIGHTS BROADER USA NETWORK RICI – INDICATIVE3 Zero recordable incidents in FY15 20 BROADER AUSTRALIAN NETWORK RICI – INDICATIVE3 ̶ 5.7 million construction hours without a lost-time injury1 15 Focus on reducing road injury
Slide 8: FY15 Operational Highlights
FY15 OPERATIONAL HIGHLIGHTS OPERATIONS, CUSTOMER, TECHNOLOGY AND DEVELOPMENT OPERATIONS AND TECHNOLOGY DEVELOPMENT SYDNEY LCT on-ramp completed M5 widening completed GLIDe implemented on M2 and ED GLIDe implemented on M7 and LCT NorthConnex construction commenced CCT/ED consolidation of O&M MELBOURN
Slide 9: Consistent Strategy
CONSISTENT STRATEGY To be the partner of choice with governments providing effective and innovative urban road infrastructure utilising core capabilities NETWORK COMMUNITY DEVELOPMENT TECHNOLOGY OPERATIONS PLANNING / ENGAGEMENT / DELIVERY AND CUSTOMER FORECASTING MANAGEMENT 9
Slide 10: The Value of a Network
THE VALUE OF A NETWORK TRAFFIC AND TOLLING OPERATIONAL EFFICIENCIES • Traffic growth through economic cycles • Economies of scale • Fully electronic tolling with dynamic pricing NETWORK • Early adoption of proven technology capability • Active network management CHARACTERISTICS • Inflation linked pr
Slide 11: Economic Contribution of Toll Roads
ECONOMIC CONTRIBUTION OF TOLL ROADS Detailed modelling estimates the direct economic benefit of toll roads over ten years is $52 billion across Australian business, households and environment compared to a scenario in which these toll roads did not exist over that same period1 BUSINESS $24B HOUSEHOL
Slide 12: Financial Results
transurban § FINANCIAL RESULTS — a a
Slide 13: Statutory Results
STATUTORY RESULTS SUMMARY FY15 ($M) FY14 ($M) KEY DRIVERS Toll revenue 1,514 906 Toll revenue $524 million increase driven by TQ and CCT acquisitions and consolidation of US EBITDA 782 759 business (which was previously equity accounted) Growth from existing assets driven largely by traffic upli
Slide 14: Proportional Results
PROPORTIONAL RESULTS SUMMARY FY15 FY14 FY15 ($M) FY14 ($M) 1 adjusted1 adjusted2 % CHANGE3 KEY DRIVERS ($M) ($M) Toll revenue 1,559 1,117 1,223 1,105 10.7% Toll revenue Fee and other revenue 167 115 141 115 22.6% Contributions from new assets including: TQ $247 million, CCT $55 million, 95 Express
Slide 15: EBITDA Movement
EBITDA MOVEMENT +23.0% Margin improvement driven by $5M $1,289M $11M revenue growth, operational $225M efficiencies and the benefit of recent capital investment into the networks +13.1% $121M $1,048M $927M FY14 Adjusted EBITDA Existing FY15 Adjusted EBITDA Acquisitions (TQ & CCT) New Assets Owners
Slide 16: Cost Movement
COST MOVEMENT $121M $437M Operational efficiencies reflected in margin expansion Increased capability in technology, development and project delivery Business expansion and delivery of network strategy ̶ Increased development activities in all markets ̶ Technology projects to enhance business
Slide 17: Free Cash Flow
FREE CASH FLOW Weighted average number of securities available for distribution has increased as a result of the equity FREE CASH FLOW FY15 FY14 % CHANGE raising to support the QM acquisition Movement in free cash influenced by: Free cash $768M $572M 34.3% ̶ Growth in EBITDA from 100 per cent ow
Slide 18: Diversification of Funding Sources
DIVERSIFICATION OF FUNDING SOURCES DEBT RAISED TO SUPPORT ACQUISITIONS, CAPITAL INVESTMENT AND REFINANCING FY151 GROUP DEBT FY141 GROUP DEBT CAPITAL STRATEGY BANK DEBT Diversify where pricing is AUD NOTES favourable CAD NOTES Extend average tenor A$15,146M A$9,994M EUR NOTES of debt USD NOTES
Slide 19: Extension of Debt Maturity Profile
EXTENSION OF DEBT MATURITY PROFILE MATURITY PROFILE AT JULY 20141 (A$ MILLION) EXISTING DEBT REFINANCED DURING FY151 FUNDING ACTIVITIES 4,000 3,000 Majority of refinanced debt is now 2,000 longer dated capital markets debt 1,000 Major issuances during FY15: - ̶ A$1.54 billion of Euro notes ̶ A$0
Slide 20: Tax Profile
TAX PROFILE Infrastructure assets require billions of dollars in upfront capital investment, leading to accounting and tax losses in early years 1 International and Australian accounting and tax principles require amortisation SIGNIFICANT of capital investment INVESTMENT Funding costs are dedu
Slide 21: Market Update
MARKET UPDATE
Slide 22: Sydney Network
SYDNEY NETWORK NORTHCONNEX RENEGOTIATION OF O&M • Construction • Previous evergreen O&M Environmental contract on ED Management plan renegotiated approved June 2015 • Insourced ED and CCT • Shaft excavation operations scheduled to commence • Contractor providing September 2015 maintenance services f
Slide 23: Melbourne Network
MELBOURNE NETWORK WESTERN CITYLINK TULLA DISTRIBUTOR WIDENING • Victorian Government • Contract renegotiation commenced reached financial close assessment of TCL’s April 2015 proposal • Construction scheduled • TCL is working to commence October collaboratively with 2015 the Victorian Government to
Slide 24: Western Distributor
WESTERN DISTRIBUTOR ENHANCING MELBOURNE'S TRANSPORT NETWORK NETWORK SOLUTION An incident on the West Gate Bridge can create traffic queues through to the southeast and western suburbs Delays on the West Gate Freeway can also impact the northern corridor The Western Distributor provides a criti
Slide 25: Brisbane Network
BRISBANE NETWORK AIRPORTLINK GATEWAY UPGRADE • Sale process confirmed NORTH • Operational efficiencies • TQ managing project on uniquely available to TQ behalf of the Queensland consortium Government • D&C contractor appointed TQ INTEGRATION LEGACY WAY • Integration program on track • Opened 25 June
Slide 26: Northern Virginia Network
NORTHERN VIRGINIA NETWORK I-66 495 NORTHBOUND • VDOT announced on 15 SHOULDER LANE PROJECT July 2015 its intention to • VDOT opened the shoulder procure the design, build lane July 2015 to address and operation of the 25 mile bottlenecks that were HOT Lanes system on I-66 impacting the 495 Express L
Slide 27: Ramp Up Continues for 495 and 95 Express Lanes
RAMP UP CONTINUES FOR 495 AND 95 EXPRESS LANES GROWING TRAFFIC VOLUMES, TOLL PRICE AND REVENUE AVERAGE WEEKDAY AVERAGE WEEKDAY AVERAGE WEEKDAY TRAFFIC (‘000)1 TOLL (USD) REVENUE (USD ‘000) 55 $6 $250 $200 45 $4 $150 $100 35 $2 $50 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-14 Sep-14 Nov-14 Jan-15
Slide 28: Outlook
OUTLOOK Networks FY16 distribution Core focus on safe Technology to Leadership in delivering growth guidance of 44.5 and efficient improve customer policy and positioned to cps representing operation of interaction and development, provide further 11 per cent growth networks operational safety and o
Slide 29: Appendix
transurban § APPENDIX Se. are , a = ee
Slide 30: Accounting Changes
ACCOUNTING CHANGES KEY CHANGES TO ACCOUNTING FOR ASSETS TQ Financial close on the acquisition of QM occurred 2 July 2014. Following acquisition, QM was renamed TQ. The results of TQ are included from that date with no contribution in the pcp. Legacy Way opened to traffic on 25 June 2015. The Group s
Slide 31: Statutory Results
STATUTORY RESULTS FY15 ($M) FY14 ($M) % CHANGE Toll revenue 1,514 906 67.1% Fee revenue 112 79 41.8% Construction revenue 190 110 72.7% Other revenue 44 55 (20.0%) Total revenue 1,860 1,150 61.7% Employee benefit expense (116) (82) 41.5% Road operating costs (243) (135) 80.0% Construction costs (185
Slide 32: Proportional Results
PROPORTIONAL RESULTS PROPORTIONAL EARNINGS FY15 ($M) FY14 ($M) % CHANGE Toll revenue 1,559 1,117 39.6% Fee and other revenue 167 115 45.2% Total revenue 1,726 1,232 40.1% Total costs (437) (298) 46.6% EBITDA excluding significant items 1,289 934 38.0% Significant items (272) - 100.0% EBITDA 1,017 93
Slide 33: FY15 Proportional Result by Asset
FY15 PROPORTIONAL RESULT BY ASSET FEE & OTHER NET FINANCE INCOME TAX OWNERSHIP ASSET TOLL REVENUE EBITDA D&A NPBT NPAT REVENUE COST EXPENSE (EXP) / BENEFIT % $M $M $M $M $M $M $M $M 100.0% M2 221 10 192 (84) (41) 67 14 81 100.0% LCT 75 3 47 (19) (12) 16 (4) 12 100.0% CCT 55 2 31 (25) (12) (6) 1 (5)
Slide 34: FY14 Proportional Result by Asset
FY14 PROPORTIONAL RESULT BY ASSET FEE & OTHER NET FINANCE INCOME TAX OWNERSHIP ASSET TOLL REVENUE EBITDA D&A NPBT NPAT REVENUE COST EXPENSE (EXP) / BENEFIT % $M $M $M $M $M $M $M $M 100.0% M2 193 6 162 (83) (52) 27 16 43 100.0% LCT 69 3 51 (25) (13) 13 (5) 8 100.0% CCT 1 - 1 - 2 3 (1) 2 75.1% ED 79
Slide 35: Maintenance Provision
MAINTENANCE PROVISION1 MAINTENANCE EXPENSE RECOGNISED MAINTENANCE CASH SPEND FY15 ($M) FY14 ($M) FY15 ($M) FY14 ($M) CityLink (12) (12) (7) (21) M2 (5) (5) (4) (1) LCT (9) - (8) (1) CCT (6) N/A (1) N/A ED (11) (15) (22) (13) M5 (2) (2) (3) (2) M7 1 (6) (4) (1) Gateway Motorway (9) N/A (1) N/A Logan
Slide 36: Net Finance Costs
NET FINANCE COSTS STATUTORY NET FINANCE COST EXPENSE PROPORTIONAL NET FINANCE COST PAID FY15 ($M) FY14 ($M) FY15 ($M) FY14 ($M) Controlled assets CityLink (27) (33) (22) (28) M2 (41) (52) (44) (47) LCT (12) (13) (12) (11) CCT (12) 2 (12) 1 ED (30) (39) (24) (30) DRIVe (1) - - - 95 Express Lanes (13)
Slide 37: Free Cash Calculation
FREE CASH CALCULATION FREE CASH CALCULATION SOURCE OF INFORMATION/EXPLANATION Cash flows from operating activities Statutory Transurban Holdings Limited operating cash flow (includes cash inflow from M7 TLNs and M5 loan notes). (refer Group Statutory accounts) Add back transaction and integration co
Slide 38: Free Cash Flow
FREE CASH FLOW FY15 ($M) FY14 ($M) % CHANGE Cash flows from operating activities (refer Group Statutory accounts) 304 521 (41.9%) Add back transaction and integration costs related to acquisitions (non 100% owned entities) 419 - 100.0% Add back payments for maintenance of intangible assets 91 36 158
Slide 39: Funding Structure at 30 June 2015
FUNDING STRUCTURE AT 30 JUNE 2015 Transurban Bank Debt Capital Markets Debt Government Debt Non Recourse Corporate Debt NSW TQ US Capital Markets Bank Debt Term Debt M5 M2 CCT AMTN 495 Express Lanes 95 Express Lanes AMTN A$0.1B A$0.7B A$0.8B A$0.3B A$0.5B A$0.8B US$0.1B Private Working M7 LCT PABs P
Slide 40: Group Debt at 30 June 2015
GROUP DEBT AT 30 JUNE 2015 FACILITY FACILITY TOTAL FACILITY PROPORTIONAL STATUTORY DRAWN (US$M) (A$M) (A$M) DRAWN ($M) (A$M) CORPORATE DEBT1 Working capital lines2 - 875 875 515 515 Term bank debt 93 125 246 246 246 USPP 162 1,201 1,412 1,412 1,369 AUD Notes - 800 800 800 800 EMTN (CAD and Euro Note
Slide 41: Drawn Debt
DRAWN DEBT PROPORTIONAL BASIS AUD1 30 JUN 2015 30 JUN 2014 MOVEMENT EXPLANATION3 ($M) ($M) ($M) A$833 million Euro Notes raised in September 2014 and used to prepay A$375 million term debt and A$136 Corporate 4,297 3,268 1,029 million of USPP. A$706 million Euro Notes also raised in May 2015. A$1,78
Slide 42: Key Debt Metrics
KEY DEBT METRICS 30 JUN 2015 30 JUN 2014 TRANSURBAN NON TRANSURBAN NON GROUP CORPORATE RECOURSE GROUP CORPORATE RECOURSE Weighted average maturity (years)1 7.8 yrs 5.0 yrs 9.7 yrs2 7.5 yrs 3.9 yrs 10.4 yrs3 Weighted average cost of AUD debt4 5.3% 5.6% 5.1% 6.3% 6.4% 6.2% Weighted average cost of USD
Slide 43: Corporate Debt Maturities
CORPORATE DEBT MATURITIES BY FINANCIAL YEAR – AS AT 30 JUNE 2015 2,200 2,000 Working Capital Facilities Term Bank Debt Working Capital Facilities Term Bank Debt 1,800 A$ notes A$ notes USPP A$ Notes EMTN Letters of Credit 1,600 EMTN Letters of Credit A$ MILLION 1,400 1,200 1,000 60 800 133 300 600 1
Slide 44: Non Recourse Debt Maturities
NON RECOURSE DEBT MATURITIES BY FINANCIAL YEAR – AS AT 30 JUNE 2015 2,200 2,000 TQ (inc. Clem7) ED 1,800 520 M2 M5 M7 LCT 1,600 495 Express Lanes CCT A$ MILLION 1,400 95 Express Lanes 403 277 405 525 1,200 1,000 260 350 800 288 600 293 1150 1226 400 750 225 625 200 447 225 300 250 200 200 315 - 1. T
Slide 45: Operating Asset Portfolio
OPERATING ASSET PORTFOLIO SUMMARY STATISTICS CITYLINK M5 M2 ED M7 LCT CCT 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 financial close 35 years 34 years 51 years 48 years 41 years 40 years 30 years Concession
Slide 46: Operating Asset Portfolio
OPERATING ASSET PORTFOLIO SUMMARY STATISTICS GATEWAY GO BETWEEN LEGACY 495 EXPRESS 95 EXPRESS LOGAN MOTORWAY CLEM7 MOTORWAY BRIDGE WAY LANES2 LANES2 OVERVIEW QLD QLD QLD QLD QLD USA USA Opening date Dec 1986 Dec 1988 Mar 2010 July 2010 June 2015 Nov 2012 Jan 2015 Concession period from financial clo
Slide 47: Tolling Escalation
TOLLING ESCALATION EMBEDDED INFLATION PROTECTION MOTORWAY ESCALATION CityLink Escalated quarterly by the greater of quarterly CPI or 1.1065 per for the first 16 years, then quarterly by CPI. This is subject to a cap of annual CPI plus 2.5 per cent, which cannot be exceeded. M2 Escalated quarterly by
Slide 48: Summarised Group Structure
SUMMARISED GROUP STRUCTURE STAPLED STRUCTURE TRANSURBAN HOLDINGS LIMITED TRANSURBAN HOLDING TRUST TRANSURBAN INTERNATIONAL LIMITED CORPORATE ROAD/OPERATING ROAD/OPERATING ENTITIES OTHER ENTITIES CORPORATE ENTITIES ENTITIES ENTITIES Including: Companies operating and maintaining Holding entity employ
Slide 49: Glossary
transurban
Slide 50: Glossary
GLOSSARY TERM DEFINITION ADT Average Daily Traffic. ADT is calculated by dividing the total number of trips on each asset (transactions on CityLink) by the number of days in the period. AMTN Australian Medium Term Note AUD Australian Dollars AWE Average Weekly Earnings CAD Canadian Dollars CCT Cross
Slide 51: Glossary
GLOSSARY TERM DEFINITION HOV High Occupancy Vehicle LCT Lane Cove Tunnel LCV Light Commercial Vehicle M2 Hills M2 M5 M5 South West Motorway M7 Westlink M7 N.M. Not Meaningful NPAT Net Profit After Tax NWRG North Western Roads Group O&M Operations and Maintenance PAB Private Activity Bond PCP Prior c
Slide 52: Glossary
GLOSSARY TERM DEFINITION TCL Transurban ASX code TIFIA Transportation Infrastructure Finance and Innovation Act TLN/SLN Term Loan Note/Shareholder Loan Note. An interest bearing shareholder loan. Currently Transurban has TLNs in place on NWRG, M5 and SLNs on TQ. TQ Transurban Queensland. Name change
Slide 53: FY15 Results
FY15 RESULTS) 11 AUGUST 2015 EE —