Transurban Group Ltd. · ASX:TCL
Transurban — FY2014 Earnings Presentation
64 slides from Transurban's earnings presentation, Aug 5, 2014
Slide 1: 2014 Full-Year Results
2014 FULL-YEAR RESULTS 5 AUGUST 2014
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 Hol ding Trust (ARSN 098 807 419) and Transurban International Limited (ACN 121 746 825). The responsible entity of Transurban Holding Trust is
Slide 3: Agenda
AGENDA 1 FY14 in review 2 Financial results 3 Market update 4 Appendices 3
Slide 4: FY14 Review
FY14 REVIEW SCOTT CHARLTON CHIEF EXECUTIVE OFFICER
Slide 5: FY14 Highlights
FY14 HIGHLIGHTS Average daily Proportional toll Proportional FY14 distribution traffic growth – revenue growth1 EBITDA growth1 Australian assets 6.0% 12.6% 12.8% 35¢ 1. Refer to slide 2 for explanation of proportional toll revenue and proportional EBITDA. 5
Slide 6: FY14 Highlights: Distribution Growth
FY14 HIGHLIGHTS DISTRIBUTION GROWTH FY15 distribution guidance of 39 cents − Expectation of 7 cent fully franked component − Expected to be 100% free cash1 covered FY14 distribution of 35 cents − Includes 7 cent fully franked component − 97% free cash covered 1. Refer to slide 2 for explanation
Slide 7: FY14 Highlights: Portfolio Performance
FY14 HIGHLIGHTS PORTFOLIO PERFORMANCE1 % OF PROPORTIONAL TRAFFIC TOLL REVENUE EBITDA ASSETS TO BE ASSET TOLL REVENUE GROWTH (%) GROWTH (%) GROWTH (%) INCLUDED FROM FY15 47.9% CityLink 1.6% 8.0% 9.5% Cross City Tunnel 17.3% Hills M2 13.8% 34.7% 38.3% Gateway Motorway 10.3% Westlink M7 8.1% 10.2% 13.7
Slide 8: FY14 Highlights: Operational
FY14 HIGHLIGHTS OPERATIONAL TOLLING & CUSTOMER OPERATIONS & CORPORATE MANAGEMENT MAINTENANCE New tolling system roll out Enhanced direct oversight Executive team changes to under way in NSW – Hills and management of critical deliver on next phase of M2 and the Eastern activities by Transurban
Slide 9: FY14 Highlights: Safety
FY14 HIGHLIGHTS SAFETY TCL has adopted a corporate target of 15% reduction in injury crashes, consistent with state and federal road safety strategies over a five-year period FY15 to FY19 Continuing downward trend for employee/subcontractor medically treated injuries with two medical treatment a
Slide 10: FY14 Highlights: Portfolio Development
FY14 HIGHLIGHTS PORTFOLIO DEVELOPMENT VIC NSW QLD USA CityLink-Tulla Hills M2 upgrade QM acquisition 95 Express Lanes Widening completed August completed July 2014 85% complete in-principle 2013 Integration under way − On schedule for agreement reached M5 widening 80% into broader TCL co
Slide 11: Portfolio Diversification
PORTFOLIO DIVERSIFICATION LANE KMS1 ■ Victoria ■ NSW ■ QLD ■ USA 1. Represents total asset kms, not TCL proportional ownership. 4. Includes Lane Cove Road on-ramp completed in July 2014. 2. TCL transferred ownership of Pocahontas 895 to lenders in May 2014. 5. 95 Express Lanes on schedule for comple
Slide 12: Consistent Strategy
CONSISTENT STRATEGY ROAD INFRASTRUCTURE COMPETITIVE CLEAR MARKET PARTNER OF CHOICE ADVANTAGE DEFINITION Further opportunities to Continued focus on driving Focus remains on eastern develop network footprints in operational efficiencies seaboard of Australia and core markets within existing net
Slide 13: Full-Year Financial Results
FULL-YEAR FINANCIAL RESULTS LEIGH PETSCHEL ACTING CHIEF FINANCIAL OFFICER
Slide 14: Statutory Results Summary
STATUTORY RESULTS SUMMARY FY14 ($M) FY13 ($M) Net profit 252.2 174.5 + 44.5% Toll revenue 906.5 801.2 + 13.1% Fee & other road revenue 94.8 85.5 + 10.9% EBITDA (statutory basis) 758.7 676.2 + 12.2% FY14 distributions 35¢ per security (includes 7¢ fully franked component) ─ Final distribution of 18¢
Slide 15: Statutory Results: Income Statement
STATUTORY RESULTS INCOME STATEMENT YEAR ENDED 30 JUNE 2014 30 JUNE 14 30 JUNE 13 ($M) ($M) % CHANGE Toll revenue 906.5 801.2 13.1% Fee and other revenue 94.8 85.5 10.9% Construction revenue 109.8 265.8 (58.7%) Business development & other revenue 38.8 42.6 (8.9%) Total revenue 1,149.9 1,195.1 (3.8%)
Slide 16: Proportional Results Summary
PROPORTIONAL RESULTS SUMMARY FY14 ($M) FY13 ($M) KEY DRIVERS Toll revenue 1,116.7 991.4 + 12.6% Fee revenue Fee revenue 93.3 75.8 + 23.1% 495 Express Lanes contributing for full year Improvements to CityLink violations recovery processes Other revenue 17.5 27.1 -- 35.4% Image-based tolling fee
Slide 17: Proportional Results
PROPORTIONAL RESULTS YEAR ENDED 30 JUNE 2014 30 JUNE 14 30 JUNE 13 ($M) ($M) % CHANGE Toll revenue 1,116.7 991.4 12.6% Fee revenue 93.3 75.8 23.1% Other revenue 17.5 27.1 (35.4%) Net TTMS revenue 4.2 9.4 (55.3%) Total revenue 1,231.7 1,103.7 11.6% Operating costs (253.0) (233.8) 8.2% Business develo
Slide 18: Direct Costs
DIRECT COSTS COMPONENTS OF $30.4M PROPORTIONAL DIRECT COST INCREASE $10.8m $7.5m $9.6m 3.7% underlying cost $3.1m increase. 495 Express Lanes first full year of operations – Increase in commenced operations maintenance $5.9m 17 November 2012. expenditure of $10.8m (excluding 495 ): ‒ CityLink ne
Slide 19: Margin Growth
MARGIN GROWTH EBITDA MARGIN EBITDA MARGIN EBITDA MARGIN ASSET FY14 FY13 CHANGE (%) CityLink 90.3% 89.0% 1.3% Hills M2 84.1% 81.9% 2.2% Westlink M7 83.6% 81.0% 2.6% M5 South West Motorway 94.9% 93.1% 1.8% M1 Eastern Distributor 66.5% 71.1% (4.6%) Lane Cove Tunnel 73.0% 60.0% 13.0% 495 Express Lanes (
Slide 20: Free Cash Flow
FREE CASH FLOW FREE CASH FLOW 30 JUNE 14 ($M) 30 JUNE 13 ($M) % CHANGE Free cash1 571.9 443.3 29.0% Underlying free cash per security (cents) –weighted average 33.9 30.1 12.6% securities eligible for distribution2 FY14 distribution of 35 cents − 97% free cash covered − Includes the issue of 404.5
Slide 21: Free Cash Flow Calculation
FREE CASH FLOW 30 JUNE 14 30 JUNE 13 PURPOSE: To provide a FREE CASH CALCULATION (Basis of preparation explained in slide 40) ($M) ($M) % CHANGE detailed bridge between cash flows from operating activities, Cash flows from operating activities (refer THL Group Statutory accounts) 521.0 411.3 26.7% c
Slide 22: Funding Update
FUNDING UPDATE RELIABLE ACCESS TO DIVERSIFIED FUNDING SOURCES $2.3Bn debt raised in FY14 at corporate and asset level − Continued debt capital markets issuances − Debut corporate Eurobond issue and first issue for NSW toll roads (M1 Eastern Distributor) − Attractive borrowing costs in current mark
Slide 23: Funding Update: Debt Snapshot
FUNDING UPDATE DEBT SNAPSHOT STRONG METRICS1 – LOWER COSTS AND HIGHER INTEREST COVERAGE 30 JUNE 2014 30 JUNE 2013 Average A$ cost ▼ 6.3% 6.6% Average US$ cost ▼ 4.0% 4.6% Gearing ▼ 41.0% 2 42.8% Corporate SICR ▲ 2.9 2.5 Fixed / hedged ▬ 94.1% 94.8% Average debt maturity ▼ 7.5 years 9.7 years Corpora
Slide 24: Market Update
MARKET UPDATE SCOTT CHARLTON CHIEF EXECUTIVE OFFICER
Slide 25: Victoria: Network Development
VICTORIA NETWORK DEVELOPMENT CityLink – Tulla Widening in-principle agreement reached in April − Major upgrade to the western section of CityLink, the Bolte Bridge-West Gate Freeway interchange and the Tullamarine Freeway − East West Link interface addressed through in-principle agreement Victor
Slide 26: Victoria: CityLink-Tulla Widening
VICTORIA: CITYLINK-TULLA WIDENING 1 extra lane 2 extra lanes OVERVIEW Extra lanes to ease congestion and add an extra 30% capacity Improvements to Bolte Bridge interchange with West Gate Freeway to improve safety Full electronic freeway management system – in line with Southern Link –
Slide 27: Victoria: Evolving Operating Model
VICTORIA EVOLVING OPERATING MODEL Operational initiatives In-housing of CityLink road operations and incident response with acquisition of TransLink Operations in May Overheight vehicle detection system upgrade implemented in July 2014 to address incidents in CityLink tunnels Customer service im
Slide 28: NSW Market: Network Development
NSW MARKET NETWORK DEVELOPMENT Strong traffic and revenue growth continues across north-west corridor after Hills M2 Upgrade completion in August 2013 ─ Further corridor enhancement with Lane Cove Rd on-ramp opened late July 2014 M5 West widening 80% complete with first lanes opened in July and
Slide 29: NorthConnex Key Milestones
NORTHCONNEX KEY MILESTONES PROJECT July – September 2014 – Environmental Impact Statement on public display MILESTONES Late 2014 – project approval target Late 2014 – expected to reach financial close Early 2015 – construction commences Late 2015 – Hills M2 integration work to commence – e
Slide 30: Cross City Tunnel
CROSS CITY TUNNEL EXPANDING NETWORK FOOTPRINT Financial close late June 2014 Asset integration under way − Tolling support services transferred to Roam Express − Opportunity for operational synergies with adjoining Eastern Distributor (75.1% TCL owned) First 100-day tasks now being implemented
Slide 31: Queensland: Integration
QUEENSLAND INTEGRATION REVIEW Positive initial engagement since transfer in July 2014 Results of initial TCL review consistent with expectations OPERATIONAL Opportunities for targeted operational efficiencies across all areas of EFFICIENCES business − Customer migration to online self-service
Slide 32: Queensland: Clear Strategic Rationale
QUEENSLAND CLEAR STRATEGIC RATIONALE BRISBANE CPI VS OTHER CITIES Financial close on Queensland Motorways JUNE QUARTER 2013 TO JUNE QUARTER 2014 acquisition achieved 2 July 2014. TCL 62.5% ownership Urban network with extensive operating history and substantial available capacity Brisbane CPI
Slide 33: USA Key Highlights
USA KEY HIGHLIGHTS 495 Express Lanes capital restructure completed 4 June 2014 − Approximately US$430 million of project debt and related swaps paid down − Approximately US$280 million additional equity from Transurban − US$150 million of existing liquidity reserves released and applied to debt re
Slide 34: 495 Express Lanes: Revenue and Pricing Profile
495 EXPRESS LANES REVENUE AND PRICING PROFILE Record daily high in toll revenue of $161,945 achieved on 29 May 2014 Average workday toll revenue for month of June 2014 was $126,369 Average dynamic toll charged in the June 2014 quarter was $2.83 34
Slide 35: 95 Express Lanes: On Schedule for Completion
95 EXPRESS LANES ON SCHEDULE FOR COMPLETION LATE 2014 Construction 85% complete HISTORICAL USE OF EXISTING HOV LANES On schedule for completion late calendar 2014 41% 19% 40% Integrated operating model including tolling system to leverage efficiencies across both assets Integrated website an
Slide 36: Conclusion
CONCLUSION PORTFOLIO MANAGEMENT FREE CASH GROWTH NETWORK OPERATIONS Portfolio development Confirmed outlook for Continued drive for activities support medium FY15 – 39 cent distribution operational efficiencies and long-term growth guidance across networks to deliver Network positions in all
Slide 37: Appendix 1: Basis of Preparation
APPENDIX 1 BASIS OF PREPARATION
Slide 38: Reconciliation: Proportional Ownership Percentages
RECONCILIATION PROPORTIONAL OWNERSHIP PERCENTAGES PROPORTIONAL OWNERSHIP PERCENTAGES STATUTORY EBITDA FROM TO % ACCOUNTING TREATMENT CityLink 1-Jul-13 30-Jun-14 100 Consolidated into Transurban Group Hill M2 1-Jul-13 30-Jun-14 100 Consolidated into Transurban Group Lane Cove Tunnel 1-Jul-13 30-Jun-1
Slide 39: Reconciliation: Free Cash
RECONCILIATION FREE CASH FREE CASH CALCULATION SOURCE OF INFORMATION/EXPLANATION Cash flows from operating activities (refer Group Statutory accounts) Statutory Transurban Holdings Limited cash flow (includes cash inflow from M7 TLNs and M5 loan notes) Adjusted for: M7 Term Loan Notes interest recei
Slide 40: Key Changes to Accounting for Assets 2014
RECONCILIATION KEY CHANGES TO ACCOUNTING FOR ASSETS - 2014 CROSS CITY TUNNEL Transurban acquired the debt of CCT on 30 December 2013. (CCT) For statutory reporting purposes Transurban controlled the asset from that date and is consolidated into the Group results, classified as a discontinued operati
Slide 41: Appendix 2: Detailed Financials
APPENDIX 2 DETAILED FINANCIALS
Slide 42: Result by Asset 100%: Consolidated Assets June 2014
RESULT BY ASSET – 100% CONSOLIDATED ASSETS – 30 JUNE 2014 $ MILLIONS PURPOSE: To provide a CROSS CITY 495 EXPRESS breakdown, by asset at 100%, of TUNNEL ROAM LANES QLD CORPORATE management’s view of Transurban’s LANE COVE (26 JUN 2014 – TOLLING & (4 JUN 2014 – (26 APR 2014 – statutory P&L. CITYLINK
Slide 43: Result by Asset 100%: Equity Assets June 2014
RESULT BY ASSET – 100% EQUITY ASSETS – 30 JUNE 2014 $ MILLIONS PURPOSE: To provide a breakdown, by asset POCAHONTAS 895 495 EXPRESS LANES DRIVE at 100%, of M5 SOUTH WEST (1 JUL 2013 – (1 JUL 2013 – (1 JUL 2013 – management’s view of MOTORWAY WESTLINK M7 14 MAY 2014) 4 JUN 2014) 4 JUN 2014) TOTAL the
Slide 44: Statutory Income Statement to EBITDA June 2014
RECONCILIATION STATUTORY INCOME STATEMENT TO EBITDA – 30 JUNE 2014 $ MILLIONS PURPOSE: To provide a reconciliation between OFFSET CONSTRUTION management’s view of Refer to the ‘Results by Consolidated 100% OTHER ACCOUNTING REALLOCATION Transurban’s P&L and the Asset – 100%’ on slide 42. CONSOLIDATED
Slide 45: Statutory EBITDA to Proportional EBITDA
RECONCILIATION STATUTORY EBITDA TO PROPORTIONAL EBITDA Non-controlling interest per ‘Results by 30 JUN 14 ($M) 30 JUN 13 ($M) % CHANGE PURPOSE: To detail the Consolidated Asset – 100%’ on slide 42. adjustments made at an Statutory EBITDA 758.7 676.2 12.2% EBITDA level between statutory and proportio
Slide 46: Result by Asset 100%: Consolidated Assets June 2013
RESULT BY ASSET – 100% CONSOLIDATED ASSETS – 30 JUNE 2013 LANE COVE M1 EASTERN ROAM TOLLING CITYLINK HILLS M2 TUNNEL DISTRIBUTOR AND TOLLAUST OTHER TOTAL Toll revenue 495.8 143.3 61.5 100.5 – – 801.1 Fees and other revenue 46.4 5.0 2.0 0.6 25.7 44.9 124.5 Total revenue 542.2 148.3 63.5 101.1 25.7 44
Slide 47: Result by Asset 100%: Equity Assets June 2013
RESULT BY ASSET – 100% EQUITY ASSETS – 30 JUNE 2013 $ MILLIONS M5 SOUTH WEST POCAHONTAS 495 EXPRESS MOTORWAY WESTLINK M7 895 LANES DRIVE TOTAL Toll revenue 188.8 209.4 15.1 7.2 – 420.5 Fee and other revenue 12.8 3.7 0.1 1.9 – 18.5 Total revenue 201.6 213.1 15.2 9.1 – 439.0 Total cost (25.9) (43.5) (
Slide 48: Statutory Income Statement to EBITDA June 2013
RECONCILIATION STATUTORY INCOME STATEMENT TO EBITDA – 30 JUNE 2013 $ MILLIONS 100% OTHER OFFSET CONSTRUTION REALLOCATION CONSOLIDATED REVENUE NET BUSINESS ACCOUNTING DISCLOSURE OF CAPITALISED STATUTORY ASSETS REALLOCATION DEVELOPMENT UNDER AASB 1 12 COSTS P&L Toll revenue 801.2 – – – – 801.2 Fee & o
Slide 49: Reconciliation of Free Cash
RECONCILIATION OF FREE CASH Refer to proportional P&L on 30 JUNE 14 30 JUNE 13 PURPOSE: To provide a detailed slide 17. % CHANGE ($M) ($M) bridge between proportional EBITDA, proportional operating Proportional EBITDA 934.1 828.0 12.8% cash and free cash. Adjusted for proportional: Maintenance provi
Slide 50: Maintenance Provision Reconciliation
MAINTENANCE PROVISION RECONCILIATION INCLUDED IN OPERATING COSTS ADDITIONAL MAINTENANCE PROVISION RECOGNISED DURING THE YEAR 30 JUNE 14 ($M) 30 JUNE 13 ($M) PURPOSE: To provide a summary, by asset, of CityLink Total $17.0M 12.0 7.6 maintenance provision Refer to free cash flow expense recognised dur
Slide 51: Finance Costs: Net Finance Costs Paid June 2014
FINANCE COSTS NET FINANCE COSTS PAID – 30 JUNE 2014 NON-CASH ITEMS Refer to the ‘Results by Consolidated Asset – 100%’ STATUTORY CONCESSION & ACCRETION, OTHER NET PROPORTIONAL PURPOSE: To provide a on slide 42. NET DEBT MAINTENANCE TIFIA, TLN NON-CASH INTEREST NET INTEREST detailed bridge between No
Slide 52: Finance Costs: Net Finance Costs Paid June 2013
FINANCE COSTS NET FINANCE COSTS PAID – 30 JUNE 2013 NON-CASH ITEMS CONCESSION & ACCRETION, OTHER NET PROPORTIONAL STATUTORY MAINTENANCE TIFIA, TLN & NON-CASH INTEREST NET INTEREST OWNERSHIP NET INTEREST DEBT FEES UNWIND USPP ITEMS PAID PAID CONTROLLED ENTITIES CityLink 100.0% (57.3) 7.9 7.1 – (1.3)
Slide 53: Taxation
TAXATION STATUTORY AND PROPORTIONAL PURPOSE: To provide a STATUTORY (TAX PAID) / REFUNDS RECEIVED INCLUDES 30 JUNE 14 ($M) 30 JUNE 13 ($M) summary, by asset, of statutory and proportional M1 Eastern Distributor 0.3 (7.2) tax paid during the period. M4 – 0.1 Transurban USA 0.5 – Westlink M7 holding c
Slide 54: Appendix 3: Detailed Treasury and Funding
APPENDIX 3 DETAILED TREASURY AND FUNDING
Slide 55: Group Drawn Debt at 30 June 2014
GROUP DRAWN DEBT AT 30 JUNE 2014 TRANSURBAN AUD USD CORPORATE DEBT ($ MILLION) ($ MILLION) Working capital lines1 – 233 Term bank debt 500 93 US Private Placements 1,336 162 Domestic AUD bonds 800 – EMTN (C$ and Euro Notes) 632 305 Total 3,268 793 NON RECOURSE NON RECOURSE (AUD $ MILLION) ASSET DEBT
Slide 56: Total Group Drawn Debt
TOTAL GROUP DRAWN DEBT PROPORTIONAL DRAWN DEBT GROUP DEBT 30 JUNE 2014 30 JUNE 2013 MOVEMENT AUD1 ($M) ($M) ($M) EXPLANATION3 Corporate 3,268 3,219 49 399 million new Euro Notes used to prepay 100 million term debt and repay 250 million domestic bonds. 277 million new Cross City Tunnel debt, 39 mill
Slide 57: Key Debt Metrics
KEY DEBT METRICS 30 JUNE 2014 30 JUNE 2013 TRANSURBAN NON TRANSURBAN NON GROUP CORPORATE RECOURSE GROUP CORPORATE RECOURSE Weighted average maturity (years)1 7.5 yrs 3.9 yrs 10.4 yrs 9.7 yrs 3.9 yrs 13.6 yrs Weighted average cost of AUD debt2 6.3% 6.4% 6.2% 6.6% 6.5% 6.7% Weighted average cost of US
Slide 58: Corporate Debt Maturities
CORPORATE DEBT MATURITIES BY FINANCIAL YEAR – AS AT 30 JUNE 2014 1. Debt is shown in the financial year in which it matures. 2. Debt values are in A$ as at 30 June 2014. C$, Euro and US$ debt are converted at the hedged rate where cross currency swaps are in place. Unhedged US$ debt is converted to
Slide 59: Asset Debt Maturities
ASSET DEBT MATURITIES BY FINANCIAL YEAR – AS AT 30 JUNE 2014 4 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 con
Slide 60: Appendix 4: Portfolio Summary
APPENDIX 4 PORTFOLIO SUMMARY
Slide 61: Operating Asset Portfolio: Summary Statistics
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 62: Operating Asset Portfolio: Summary Statistics
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 63: 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 64: 2014 Full-Year Results
2014 FULL-YEAR RESULTS 5 AUGUST 2014