Transurban Group Ltd. · ASX:TCL
Transurban — Investor Day (April 2018)
61 slides from Transurban's investor day presentation, Apr 30, 2018
Slide 1: Investor Day 2018
Investor Day 2018 30 April 2018
Slide 2: Disclaimer
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 Transurban Infrastructure Manageme
Slide 3: Transurban
Scott Charlton Transurban INVESTOR DAY 2018
Slide 4: Investor Day 2018
Image courtesy of Volvo Car Australia. INVESTOR DAY 2018 4
Slide 5: Current state of WGTP
Install via Apple app store Current state of WGTP Future state of WGTP INVESTOR DAY 2018 5
Slide 6: Agenda and presenters
• Transurban • Listening to Scott Charlton stakeholders Henry Byrne • Capital strategy Adam Watson • Next phase for Queensland • CEO and CFO panel Q&A Sue Johnson MORNING BREAK • North America Jennifer Aument • Development Vin Vassallo • ExCo panel Q&A • People and culture • West Gate Tunnel Suzette
Slide 7: Leadership team
Scott Charlton Adam Watson Sue Johnson Jennifer Aument CEO CFO1 Group Executive, President, North Queensland America Vin Vassallo Tony Adams Andrew Head Michele Huey Group Executive, Group Executive, Group Executive, New Group Executive, Development Project Delivery South Wales─ New South Wales─ Dev
Slide 8: Network planning and forecasting
Network planning Community Development & forecasting engagement & delivery Customer Technology Operations experience INVESTOR DAY 2018 8
Slide 9: Development and acquisitions
Development Significant growth achieved since FY08 Consistently growing distributions $11.4 billion of new developments and asset FY FY FY FY FY FY FY FY FY FY FY ASSET enhancements 08 09 10 11 12 13 14 15 16 17 18 BASE $7.7 billion of acquisitions Ability to continue sourcing Brisbane new
Slide 10: Congestion and population growth
30-year population growth forecasts across our five markets1 Congestion in major cities2 50% 10 28% 9 40% 48% 59% Population (millions) Congestion 8 30% 7 6 36% 20% 5 67% 10% 4 3 0% 2 1 0 Sydney Melbourne Brisbane GWA Montreal 1. Forecast population growth for Australia between 2015/16 and 2046 publ
Slide 11: Policy and stakeholder engagement
Increasing debate around major infrastructure projects Leading and supporting sustainable transport policy is essential to remain a partner of choice—Transurban’s strategy and capability assists government partners in navigating project-specific issues Transurban will work with partners to adv
Slide 12: Long-term infrastructure planning
Majority of existing toll roads were delivered by governments from both major parties, acting on long-term master plans – Melbourne’s first long-term transportation plan released by the Bolte Government in 1969 – The 1990s saw the establishment of Sydney’s orbital road network Past infrastructur
Slide 13: Melbourne growth and West Gate
2007 “It is vital to the future economic prosperity Melbourne population to increase by almost 60%1 over 30 years, with western and northern of Victoria that we fully assess the options for personal, business, freight and public suburbs seeing majority of growth transport travel between Melbourne’
Slide 14: West Gate Tunnel Project
West Gate Tunnel Project | Transurban INVESTOR DAY 2018 14
Slide 15: West Gate Tunnel works
Components of one of two tunnel boring machines under construction Over 900,000 work hours already invested Actual spend to date of over $700 million West Gate Tunnel Project TBM personnel Approximately 1,200 people employed lock and cutter head being Third major worksite established─Tunnell
Slide 16: Capital strategy
Adam Watson Capital strategy INVESTOR DAY 2018
Slide 17: Capability investments
Investment in multi-disciplinary Supporting and developing team with industry-leading tolling systems, customer Network planning expertise Technology experience platforms, & forecasting operational security and Program to enhance strategic network models corporate systems Major project stake
Slide 18: Operational efficiencies and sustainability
Generation of operational Future value Overall efficiencies and creation sustainability of margin the organisation expansion INVESTOR DAY 2018 18
Slide 19: Balancing growth and debt
Objective Balancing distribution growth with long-term value creation Balanced approach Projects and to debt/equity acquisitions funding mix while structured to maintaining strong achieve investment grade objective credit metrics INVESTOR DAY 2018 19
Slide 20: Project funding and acquisitions
Credit metrics naturally improve as an asset matures─through growing cash flows Consortium partnerships support capital requirements Revenue levers help to manage distributions NorthConnex Transurban Queensland Capital releases provide a method of Total project cost: $2.9 billion Total acqui
Slide 21: Debt maturity and refinancing
Minimal refinancing required until FY20 Current cost of debt well below upcoming refinancings Refinancing interest at rates lower than the maturing debt 8% Current treasury position: 7% – Interest and currency hedging in place for term of facilities─ approx. 98% interest rate hedging and 100%
Slide 22: Inflation-linked pricing
Inflation-linked pricing escalators embedded in concession Australian CPI historically correlated to bond yields agreements Rising inflation environment likely to stimulate positive revenue 5% outcome 4% – Increased employment drives additional traffic growth 3% – Increased commercial activity a
Slide 23: Development
Vin Vassallo Development INVESTOR DAY 2018
Slide 24: Centralised development group
Size of business requires centralised development group to leverage core capabilities across regions Development and operational environment constantly evolving, requiring innovative ways to deliver whole of network outcomes Network planning Community Development & forecasting engagement & deliv
Slide 25: Pipeline by region
Brisbane Canada M1 Pacific Motorway Upgrade Greater Montreal Centenary/Western Motorway Opportunities where criteria widening aligns with Transurban strategy Bruce Highway Upgrade including: – Toronto – Vancouver Sydney WestConnex ($16.8 billion) Western Harbour Tunnel United States of
Slide 26: Partnership opportunities
Opportunities for partnerships to strategically leverage Transurban core capabilities in non-traditional service arrangements. Recent examples include: – Provision of tolling services to Toowoomba Second Range Crossing – Oversight of D&C delivery of Gateway Upgrade North in Brisbane Ability to d
Slide 27: Development governance
Centralised development group enables: – Good governance – Better coordination between regional development teams and core functions – Strategic allocation of resources and project prioritisation – Application of lessons learnt Refine approach to traditional development opportunities – Enhanceme
Slide 28: Efficiency and integration opportunities
Significant opportunity Core capabilities to drive Integration expertise for still exists to make efficiencies on and off new assets assets more efficient Transurban roads: – Customer interfaces through consideration of – Traffic modelling and broader road network – Tolling, roadside network p
Slide 29: People and culture
Suzette Corr People and culture INVESTOR DAY 2018
Slide 30: Workforce capabilities
Team of dedicated transport network planners and traffic Represents over 35%1 of our Network planning modelling experts workforce Technology & forecasting Team of 401 representing one of Segment workforce increased the largest traffic modelling teams five-fold2 since FY13 in the world Inso
Slide 31: Workforce count
Appropriately resourced for our current business and pipeline projects Workforce segment growth1 Aware of shifting workforce trends and the key skills required – Digital disruption─data analytics and technology skills 1,000 FY13 Current – Shifts in access to people needed to deliver strategy 800
Slide 32: Employee engagement and diversity
Employee engagement demonstrated through our Opinion Men Women 70% and Pulse surveys 62% 53% – Employee engagement at 73%1 47% 50% 50% – Leadership effectiveness at 83%1 38% 30% – 80%1 recommend Transurban as a great place to work Gender diversity promoted through programs such as our Females Ex
Slide 33: External recognition
Our people practices are in place to deliver on our strategy and we continue to receive external recognition Workplace Gender Equality Agency (WGEA) “Employer of Choice for Gender Equality” citation for four years in a row Equileap listed top 20 global company for gender equality ITS World Con
Slide 34: Trust and reputation
Henry Byrne Trust and reputation INVESTOR DAY 2018
Slide 35: Stakeholder objectives
Business partners Employees Objectives & suppliers Greater understanding of how we are perceived and mapping of stakeholder issues Government Business-led response & industry Customers to address areas for improvement Balanced view of stakeholder interests Community Investors INVESTOR DAY 2018
Slide 36: Social licence model
Our approach uses an adapted CSIRO model Context factors Distributional fairness The flow of benefits and negative impacts within the community Procedural fairness Key stakeholder issues of Social licence All stakeholders are considered Trust interest and/or concern in decision making Nature of rela
Slide 37: Stakeholder perceptions
A project was developed to listen to Transurban’s stakeholders to better understand the issues of interest or concern that could impact social licence to operate AccountAbility’s AA1000 Standard principles were applied in developing and conducting research Perceived as best in class across our c
Slide 38: Responses and initiatives
Transurban has introduced a range of practical responses, including initiatives to enhance or complement existing programs Current responses categorised by two themes: Transparency Value Examples of our initiatives Information Toll road Hardship Social signage comparator assistance investment Ro
Slide 39: Travel comparison tool
A practical tool to compare travel on alternative routes using real-time data Provides additional measures of value including fuel consumption and carbon emission savings Tool will continue to evolve based on learnings from pilot The comparison tool can be found here: https://www.citylink.co
Slide 40: Transurban roads information
Providing customers with more information to determine whether they travel on Transurban’s roads Visibility of the tolled and alternative roads travel time Using independent/third party travel time data Exploring potential pilot sites with our government partners INVESTOR DAY 2018 40
Slide 41: Queensland
Sue Johnson Queensland INVESTOR DAY 2018
Slide 42: Queensland growth opportunities
Urban sprawl Implement Leveraging Continue and population additional experience to building on growth across operational drive future existing South East efficiencies performance for relationships Queensland, (for example Brisbane with partners providing new control room opportunities consolidation)
Slide 43: EBITDA margin growth
EBITDA margins continuing to increase Insourcing operations 16% EBITDA growth1 - LW on-boarded Development projects Further EBITDA increases expected from: 450 - LEP and ICB 72% – Development projects coming online TQ LW (LEP and ICB) ALM7 71% 400 acquisition June 2014 opened June 2015 acquired
Slide 44: Equity partners and growth
Transurban Queensland’s equity partners continue to be supportive of growth Continued opportunities for growth through development projects and service offerings Pre-acquisition Today Gateway CLEM7 Legacy Way Integration Gateway Logan GBB Logan Acquisition AirportlinkM7 CLEM7 GUN ICB GBB Develop
Slide 45: South East Queensland outlook
Current success creating further opportunities in South East Queensland Population growth in South East Queensland will add almost two million people by 2041 and approximately one million in the greater Brisbane region Government has a strong focus on technology and infrastructure development
Slide 46: Customer experience initiatives
Initiatives underway to improve customer experience and reduce fees Successful implementation of GLIDe in Queensland Actively supported changes in legislation with government for improved fee structure and proactive recovery processes Enhanced customer communication—reducing customer debt thro
Slide 47: North America
Jennifer Aument North America INVESTOR DAY 2018
Slide 48: North America network potential
Network potential in North America’s most congested cities¹ 50% Supportive Government Los Angeles Demographics experience 40% Vancouver San Francisco in PPP Miami Seattle Toronto Congestion Level 30% Montreal Austin Boston GWA (Washington D.C., 20% Virginia, Maryland) Houston Denver Dallas-Fort Wort
Slide 49: A25 _ Transurban
A25 _ Transurban —— INVESTOR DAY 2018 49
Slide 50: A25 catchment area
A25 catchment area has above average population and Average annual daily traffic on main roads in the employment growth metropolitan area Northern Arc Northern Arc Laval A25 Concession Island Laval Island A25 Concession Montreal Island South AADT Shore <5,000 Montreal >5,000 Island West >10,000 >25,
Slide 51: Montreal demographics and employment
Population and population density¹ Montreal unemployment rate² Population Density (/km²) 10 7,000 1,200 Montreal, unemployment rate Population ('000s) 6,000 1,000 9 5,000 800 8 4,000 (percent) 600 7 3,000 400 2,000 6 1,000 200 5 0 0 Brisbane Melbourne Sydney GWA Montreal 4 Population Population dens
Slide 52: A25 asset overview
7.2km toll road and bridge connecting Northern Montreal across the Rivière des Prairies to commercial and residential areas Free flow, electronic tolling Concession agreement with the Ministère des Transports, de la Mobilité durable et de l'Électrification—opened in May 2011 and the concession
Slide 53: North Shore congestion and politics
Quebec provincial election in October 2018 Three major political parties have made transportation a priority in the pre-election debate Congestion relief and mobility improvements among the top issues for Montreal’s 800,000 North Shore residents and elected officials Coalition of North Shore
Slide 54: Traffic and revenue growth
Strong traffic and revenue growth over the past three years with 4% growth in total trips in 2017 Significant congestion throughout Montreal road network Opportunity to realise operational synergies by leveraging core business capabilities Development potential with supportive governments, c
Slide 55: Wrap-up
INVESTOR DAY 2018 | 7 i esac.
Slide 56: Investment proposition
Investment proposition supported by Balancing distribution growth and long term value creation capital strategy To be partner of choice with governments providing effective and Capabilities critical to delivering innovative urban road infrastructure and services utilising core strategy capabilities
Slide 57: Analyst data pack
Analyst data pack INVESTOR DAY 2018
Slide 58: Toll escalation
Toll escalation Toll rates increase with inflation annually on June 1st and when traffic 1. Tolls are categorised based on vehicle height: level thresholds are met at the beginning of each month a) Category 1—vehicles below 2.30m; and Toll escalation thresholds assessed monthly for peak and off-peak
Slide 59: Availability payments and toll income
Availability payments Average annual daily traffic ‘000s¹ Paid monthly, pro rated to CAD 13.4 million per year. Maximum annual availability 47 payment is fixed and not indexed to inflation 46 Toll income 45 Toll income includes tolls, administrative fees and government reimbursements for electri
Slide 60: Glossary
f / Glossary | INVESTOR DAY 2018 | 7 i esac.
Slide 61: Glossary
1H/2H First or second half of the financial year FredEx Fredericksburg Extension Project O&M Operations and maintenance A25 Toll road and bridge in Montreal FFO Funds from operations PPP Public private partnership ADT Average daily traffic FY Financial year PAB Private activity bond ALM7 Airportlink