Slide 1: 1H16 Results
1H16 RESULTS 1
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: Half-Year in Review
HALF-YEAR IN REVIEW 3
Slide 4: 1H16 Highlights
1H16 HIGHLIGHTS CONTINUED DISTRIBUTION GROWTH, CREATING LONG TERM VALUE • Earnings growth driven by traffic performance and operational efficiencies; FY16 distribution guidance TOLL REVENUE EBITDA GROWTH2 GROWTH1 upgraded to 45.5 cps 19.3% 14.6% • Ongoing opportunities to enhance network efficiencie
Slide 5: 1H16 Activity
1H16 ACTIVITY OPERATIONS DEVELOPMENT • TQ integration progressing ahead of investment • Construction commenced on CityLink Tulla case and program expanded to include Widening AirportlinkM7 • Achieved contractual close to acquire • Implementation of GLIDe tolling system in Sydney AirportlinkM7 increa
Slide 6: 1H16 Network Performance
1H16 NETWORK PERFORMANCE TOLL REVENUE TOLL REVENUE EBITDA NETWORK HIGHLIGHTS CONTRIBUTION ADT GROWTH (AUD) GROWTH1 GROWTH2 • Strong traffic growth observed across the network Sydney • Truck toll multipliers moving to 3 times car tolls on LCT, M5 and M7. Weighted average truck toll multiplier across
Slide 7: Distribution Growth
DISTRIBUTION GROWTH • FY16 distribution guidance upgraded to 45.5 cps, expected to be approximately 45.5₵ 100% free cash covered ■ ACTUAL • • A 13.8% increase over FY15, due to ongoing strong operational performance 1H16 distribution of 22.5 cps to be paid on 12 February 2016, ■ GUIDANCE 107% free c
Slide 8: Strategy
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 8
Slide 9: Project Pipeline
PROJECT PIPELINE FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 COMMITTED NORTHCONNEX ($1.3 billion) PROJECTS1 CITYLINK TULLA WIDENING ($1.0 billion) AIRPORTLINKM7 ACQUISITION ($1.3 billion – Entitlement Offer completed December 20152) WEBB DOCK ACCESS EXCLUSIVE ($3.5 - $4.0 billion) MONASH FREEWAY UPGRADE
Slide 10: Major Project Delivery
MAJOR PROJECT DELIVERY RISK MANAGEMENT PROCUREMENT METHODOLOGY • Majority of construction risk held by tier one contractors • Robust and competitive EOI/RFP process • Fixed price and fixed time performance based contracts • Outcome based procurement process to drive efficiency and innovation from co
Slide 11: Safety Highlights
SAFETY HIGHLIGHTS CASE STUDY – PUBLIC SAFETY HIGHLIGHTS • Transurban has awarded an innovation grant to a team at the University of Perlite Metal • Continued focus on RICI; observed Newcastle Syntactic Foam 10.4% reduction in 1H16 compared to 1H15 • New material for road safety barriers being • Zero
Slide 12: Commitment to Sustainability
COMMITMENT TO SUSTAINABILITY BE GOOD NEIGHBOURS USE LESS THINK LONG TERM • Community grants and investment • Commitment to reduce energy usage • Governance frameworks for our program by 10% by 2023 development projects use the o Major sponsor of ‘Run for the Kids’, Infrastructure Sustainability rati
Slide 13: Strategic Technology Partnerships
STRATEGIC TECHNOLOGY PARTNERSHIPS TESTED REAL-LIFE SCENARIOS IN OCTOBER 2015 AUTONOMOUS VEHICLE TESTING • Partnered with Virginia Tech and VDOT to End – Washington D.C. border test an autonomous vehicle in a real life scenario on Transurban’s Northern Virginia network Stopping in response to a • Uni
Slide 14: Financial Results
FINANCIAL RESULTS 14
Slide 15: Statutory Results
STATUTORY RESULTS SUMMARY 1H16 ($M) 1H15 ($M) KEY DRIVERS Toll revenue1 919 786 Toll revenue • $75 million increase from existing assets driven by traffic growth and toll price EBITDA 676 181 escalation • $58 million increase from Legacy Way and 95 Express Lanes Net profit/(loss) 62 (354) EBITDA EBI
Slide 16: Proportional Results
PROPORTIONAL RESULTS SUMMARY 1H16 1H15 ($M) % CHANGE KEY DRIVERS ($M) Toll revenue1 960 805 19.3% Toll revenue Other revenue2 30 27 11.1% • $54 million contribution from 95 Express Lanes and Legacy Way • $101 million increase from existing assets Total revenue 990 832 19.0% Total costs (261) (196) 3
Slide 17: EBITDA Movement
EBITDA MOVEMENT +14.6% $729M + +11.2% $22M $707M $71M $636M 1 1H15 EBITDA Existing 1H16 Existing 95 Express Lanes 1H16 EBITDA business growth business EBITDA & Legacy Way 17 1. Excludes significant items.
Slide 18: Cost Movement
COST MOVEMENT • Continued investment in long-term value creation through technology and strategic initiatives, such as road usage study and digital platforms $261M • Increase in operational and development costs in line with growth in business activities • Continued in-sourcing of operations to incr
Slide 19: Network EBITDA Margins
NETWORK EBITDA MARGINS • Margin growth achieved across each network • GLIDe costs no longer captured at corporate. Post wider roll-out, GLIDe costs allocated to assets NORTHERN SYDNEY MELBOURNE BRISBANE1 VIRGINIA EBITDA MARGIN (EBITDA/TOLL REVENUE) 1H16 79.7% 86.2% 70.2%2 46.1% Margins calculated on
Slide 20: Free Cash Flow
FREE CASH FLOW • $51 million growth from 100% FREE CASH owned Australian assets 1H16 1H15 % CHANGE FLOW • $28 million contribution from Northern Virginia assets (now Free cash $461M $378M 22.0% 100% owned) • $4 million growth in non- Weighted 100% assets1 average securities eligible 1,922M 1,906M 0.
Slide 21: Diversification of Funding Sources
DIVERSIFICATION OF FUNDING SOURCES FUNDING ACTIVITIES DEC 151 GROUP DEBT JUN 151 GROUP DEBT • Existing facilities refinanced with BANK DEBT longer dated debt AUD NOTES • Major issuances during 1H16: CAD NOTES o A$754 million of corporate USD A$12,194M A$12,236M EUR NOTES 144A notes USD NOTES o A$911
Slide 22: Market Update
MARKET UPDATE 22
Slide 23: Sydney Network
SYDNEY NETWORK NORTHCONNEX OPERATIONAL • Construction proceeding ENHANCEMENT on time and budget • Increase in recoveries • Land acquired and works following implementation underway at all tunnelling of GLIDe on LCT, M7 and sites Roam in July 2015, in addition to ongoing • Total project cost is proce
Slide 24: Melbourne Network
MELBOURNE NETWORK WESTERN DISTRIBUTOR CITYLINK TULLA WIDENING • Proposal progressed to exclusive negotiations • Construction • Project scope includes commenced in October Monash Freeway Upgrade 2015 • Commenced works on • Major works expected Webb Dock Access to begin in March 2016 • In-principle ag
Slide 25: Brisbane Network
BRISBANE NETWORK AIRPORTLINKM7 GATEWAY UPGRADE NORTH • Agreement reached to acquire AirportlinkM7 • TQ managing project on in November 2015 for behalf of the Queensland $1.87 billion, plus stamp and Federal Governments duty of $108 million and • Construction commenced transaction costs of $23 Januar
Slide 26: Northern Virginia Network
NORTHERN VIRGINIA NETWORK I-66 I-395 • Competitive process • Agreed development underway to design, build, framework with VDOT to finance, operate and progress 395 Express maintain Express Lanes Lanes project system on I-66 • Estimated project cost • Transurban shortlisted to approximately US$225 pa
Slide 27: Summary and Outlook
SUMMARY AND OUTLOOK 1H16 SUMMARY FY16 OUTLOOK • Continued double digit earnings growth • Distribution guidance upgraded to 45.5 cps, 13.8% growth year-on-year o EBITDA growth of 14.6%1 • Focus on operational efficiencies to improve • Demonstrated value of network positions network and financial perf
Slide 28: Supplementary Information
SUPPLEMENTARY INFORMATION 28
Slide 29: Contents
CONTENTS 1 DETAILED FINANCIALS 2 TREASURY 3 CORPORATE OVERVIEW 4 DEVELOPMENT OPPORTUNITIES 5 GLOSSARY 6 CALENDAR 29
Slide 30: Detailed Financials
transurban DETAILED FINANCIALS Y
Slide 31: Statutory Results
STATUTORY RESULTS 1H16 ($M) 1H15 ($M) % CHANGE Toll revenue1 919 786 16.9% Construction revenue 107 152 (29.6%) Other revenue 30 26 15.4% Total revenue 1,056 964 9.5% Employee benefit expense (59) (56) (5.4%) Road operating costs (148) (113) (31.0%) Construction costs (107) (151) 29.1% Transaction a
Slide 32: Proportional Results
PROPORTIONAL RESULTS PROPORTIONAL EARNINGS 1H16 ($M) 1H15 ($M) % CHANGE Toll revenue1 960 805 19.3% Other revenue 30 27 11.1% Total revenue 990 832 19.0% Total costs (261) (196) 33.2% EBITDA excluding significant items 729 636 14.6% Significant items - (264) N.M EBITDA 729 372 96.0% RECONCILIATION O
Slide 33: 1H16 Proportional Result by Asset
1H16 PROPORTIONAL RESULT BY ASSET 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 129 1 108 (36) (21) 51 8 59 100.0% LCT 45 - 28 (8) (6) 14 1 15 100.0% CCT 30 - 20 (12) (7) 1 (1) 1 75.1% ED 48 - 3
Slide 34: 1H15 Proportional Result by Asset
1H15 PROPORTIONAL RESULT BY ASSET 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 $M 100.0% M2 113 1 94 (41) (17) 36 6 42 100.0% LCT 40 - 25 (12) (6) 7 (3) 4 100.0% CCT 28 - 16 (12) (6) (2) - (2) 75.1% ED 43 -
Slide 35: Net Finance Costs
NET FINANCE COSTSTO BE COMPLETED STATUTORY NET FINANCE COST EXPENSE PROPORTIONAL NET FINANCE COST PAID 1H16 ($M) 1H15 ($M) 1H16 ($M) 1H15 ($M) Controlled assets CityLink (13) (14) (8) (12) M2 (21) (17) (17) (24) LCT (6) (6) (5) (5) CCT (7) (6) (6) (3) ED (19) (20) (12) (12) DRIVe - (1) - - 95 Expres
Slide 36: Maintenance Provision
MAINTENANCE PROVISION1 MAINTENANCE EXPENSE RECOGNISED MAINTENANCE CASH SPEND 1H16 ($M) 1H15 ($M) 1H16 ($M) 1H15 ($M) CityLink (7) (7) (7) (3) M2 (3) (3) (2) (3) LCT (3) (3) (6) (2) CCT (2) (3) (1) - ED (4) (6) (4) (12) M5 (3) (2) - - M7 (4) 1 (1) - Gateway Motorway (6) (3) (2) - Logan Motorway (5) (
Slide 37: Free Cash Calculation
FREE CASH CALCULATION FREE CASH CALCULATION SOURCE OF INFORMATION/EXPLANATION Cash flows from operating activities Statutory Transurban Holdings Limited operating cash flow (includes cash inflow from M7 TLNs and M5 loan notes). (refer Group Statutory accounts) Add back transaction and integration co
Slide 38: Free Cash Flow
FREE CASH FLOW RECONCILIATION OF STATUTORY CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH Half-year ended Half-year ended 31 December 2015 31 December 2014 ($M) ($M) Cash flows from operating activities (refer Group Statutory accounts) 430 (27) Add back transaction and integration costs related to
Slide 39: Reconciliation of Free Cash
RECONCILIATION OF FREE CASH RECONCILIATION OF PROPORTIONAL EBITDA TO FREE CASH 31 Dec 2015 Comments Proportional EBITDA excluding significant items 733 Refer to slide 32 for further detail Proportional net finance costs paid (cash) (305) Refer to slide 35 for further detail Add back proportional mai
Slide 40: Tax Profile
TAX PROFILE TCL’s network has required Infrastructure assets require billions of dollars in upfront capital investment, more than leading to accounting and tax losses in early years 1 International and Australian accounting and tax principles require amortisation SIGNIFICANT INVESTMENT $23B of c
Slide 41: Treasury
transurban TREASURY G
Slide 42: Funding Structure at December 2015
FUNDING STRUCTURE AT 31 DECEMBER 2015 Transurban Bank Debt1 Capital Markets Debt1 Government Debt1 Non Recourse Corporate Debt NSW TQ US Capital Markets Bank Debt M5 M2 CCT AMTN 495 Express Lanes 95 Express Lanes AMTN Term Debt A$0.7B A$0.8B A$0.3B A$0.5B A$0.5B A$0.1B USPP Working M7 LCT PABs PABs
Slide 43: Group Debt at December 2015
GROUP DEBT AT 31 DECEMBER 2015 FACILITY FACILITY TOTAL FACILITY PROPORTIONAL STATUTORY DRAWN (US$M)1 (A$M)1 (A$M) DRAWN ($M) (A$M) CORPORATE DEBT2 Working capital lines3 - 875 875 - - Term bank debt - 125 125 125 125 USPP 162 1,072 1,294 1,294 1,301 AUD Notes - 500 500 500 500 EMTN (CAD and Euro Not
Slide 44: Drawn Debt
DRAWN DEBT PROPORTIONAL BASIS AUD1 31 DEC 2015 30 JUN 2015 MOVEMENT EXPLANATION3 ($M) ($M) ($M) A$128 million US Private Placement repaid in August 2015 and A$300 million AUD bonds repaid in Corporate 3,938 4,297 (359) November 2015 using Euro bond proceeds raised in May 2015. A$68 million 144A debt
Slide 45: Key Debt Metrics
KEY DEBT METRICS 31 DEC 2015 30 JUN 2015 TRANSURBAN NON TRANSURBAN NON GROUP CORPORATE RECOURSE GROUP CORPORATE RECOURSE Weighted average maturity (years)1 9.1 yrs 6.0 yrs 11.0 yrs2 7.8 yrs 5.0 yrs 9.7 yrs3 Weighted average cost of AUD debt4 5.5% 5.8% 5.2% 5.3% 5.6% 5.1% Weighted average cost of USD
Slide 46: Extension of Debt Maturity Profile
EXTENSION OF DEBT MATURITY PROFILE JUNE 2015 MATURITY PROFILE 3,500 EXISTING DEBT 3,000 REFINANCED DURING 1H16 2,500 A$ MILLION 2,000 1,500 1,000 500 - DECEMBER 2015 MATURITY PROFILE 3,500 NEW DEBT RAISED 3,000 DURING 1H16 2,500 A$ MILLION 2,000 1,500 1,000 500 - 1. The full value of debt facilities
Slide 47: Corporate Debt Maturities
CORPORATE DEBT MATURITIES BY FINANCIAL YEAR – AS AT 31 DECEMBER 2015 2,000 1,800 Working Capital Facilities Term Bank Debt USPP A$ notes 1,600 EMTN 144A 1,400 Letters of Credit 1,200 A$ MILLION 754 1,000 4 800 60 300 133 816 600 165 400 833 125 233 240 706 575 200 300 254 94 200 219 206 222 - 1. Deb
Slide 48: Non Recourse Debt Maturities
NON RECOURSE DEBT MATURITIES BY FINANCIAL YEAR – AS AT 31 DECEMBER 2015 2,000 73 Transurban Queensland M1 Eastern Distributor 1,800 80 Hills M2 Westlink M7 1,600 Lane Cove Tunnel Cross City Tunnel 520 430 495 Express Lanes M5 1,400 525 95 Express Lanes 1,200 A$ MILLION 405 1,000 350 800 90 1311 600
Slide 49: Corporate Overview
transurban CORPORATE OVERVIEW Y
Slide 50: The Value of the Network
THE VALUE OF THE 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 CHARACTERISTICS • Active network management • Inflation linked
Slide 51: 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 52: Operating Asset Portfolio
OPERATING ASSET PORTFOLIO SUMMARY STATISTICS CITYLINK M5 M2 ED M7 LCT CCT OVERVIEW Melbourne Sydney Sydney Sydney Sydney Sydney Sydney 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 ye
Slide 53: 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 Brisbane Brisbane Brisbane Brisbane Brisbane Northern Virginia Northern Virginia Opening date Dec 1986 Dec 1988 Mar 2010 July 2010 June 2015 N
Slide 54: 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%, which cannot be exceeded. M2 Escalated quarterly by the gre
Slide 55: Enforcement Process
ENFORCEMENT PROCESS TYPICAL ARRANGEMENT VEHICLE NORTHERN VIRGINIA AUSTRALIA TRANSACTION Tolling arrangement in place Tolling arrangement in place No tolling arrangement in place 1st toll notice Reminder notice Further customer communication1 ENFORCEMENT PROCESS e.g. SMS, outbound calls, email contac
Slide 56: Safety
SAFETY • Transurban’s RICI measures the number of TRANSURBAN RICI serious road injury (an individual transported from, or receives medical treatment, at scene) 10 crashes per 100 million vehicle kilometres travelled on Transurban’s networks • Observed 10.4% reduction in 1H16 compared to 1H15 • Trans
Slide 57: Development Opportunities
DEVELOPMENT OPPORTUNITIES 57
Slide 58: Western Distributor
WESTERN DISTRIBUTOR OVERVIEW • Victorian Government has progressed the Western Distributor project through to exclusive negotiations • Project scope includes: o Webb Dock Access o Western Distributor o West Gate Freeway widening o Monash Freeway Upgrade • Commenced early works on Webb Dock Access •
Slide 59: Logan Enhancement Project
LOGAN ENHANCEMENT PROJECT OVERVIEW • Queensland Government has progressed TQ’s Logan Enhancement Project to exclusive negotiations • The project includes o Interchange upgrades o Widening parts of the Gateway Extension Motorway o Construction of new south-facing ramps at Compton Road • Final proposa
Slide 60: AirportlinkM7
AIRPORTLINKM7 OVERVIEW • TQ reached agreement in November 2015 to acquire AirportlinkM7 for $1.87 billion, plus stamp duty of $108 million and transaction costs of $23 million • 7km urban tunnel connecting Brisbane Airport and the Australian TradeCoast with the CBD, and Brisbane’s northern, southern
Slide 61: 395 Express Lanes
395 EXPRESS LANES OVERVIEW • Transurban and VDOT are now in exclusive negotiations on a development framework to progress the 395 Express Lanes, an 11 kilometre extension to the 95 Express Lanes • The project will increase capacity by converting 2 HOV lanes to 3 Express Lanes • Total project cost ex
Slide 62: 95 Express Lanes Southern Extension
95 EXPRESS LANES SOUTHERN EXTENSION OVERVIEW • Transurban and VDOT are in exclusive negotiations to extend the 95 Express Lanes by approximately 3 kilometres at the southern end • VDOT to assume all delivery and cost risk • Estimated cost to Transurban of US$25 million • Financial close expected in
Slide 63: I-66 Express Lanes
I-66 EXPRESS LANES OVERVIEW • A competitive process is underway to design, build, finance, maintain and operate Express Lanes on I-66 • Transurban shortlisted to participate, alongside two other consortia, in the competitive process with its partner Skanska • Proposals due August 2016 • Preferred bi
Slide 64: Glossary
transurban GLOSSARY G
Slide 65: Glossary
GLOSSARY TERM DEFINITION 1H16 First half financial results period. 1 July 2015 to 31 December 2015. 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 Au
Slide 66: Glossary
GLOSSARY TERM DEFINITION FFO Funds From Operations FMS Freeway Management System FREE CASH 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 to include the allowan
Slide 67: Glossary
GLOSSARY TERM DEFINITION N.M. Not Meaningful NPAT Net Profit After Tax NWRG North Western Roads Group O&M Operations and Maintenance OTHER REVENUE Other revenue includes Interoperability Charges, development and construction performance fees. PAB Private Activity Bond PCP Prior Corresponding Period
Slide 68: Glossary
GLOSSARY TERM DEFINITION TIFIA Transportation Infrastructure Finance and Innovation Act TOLL REVENUE Toll revenue includes revenue from customers, specifically tolls, service and fee revenue. TLN/SLN Term Loan Note/Shareholder Loan Note. An interest bearing shareholder loan. Currently Transurban has
Slide 69: Calendar
transurban CALENDAR G
Slide 70: 2016 Calendar
2016 CALENDAR EVENT1 LOCATION DATE Investor Roadshow Asia and Europe March 2016 Investor Roadshow North America April 2016 Q3 Traffic and Revenue Results ASX Release 14 April 2016 Strategy Day Melbourne 3 May 2016 Q4 Traffic and Revenue Results ASX Release 14 July 2016 FY16 Results ASX Release 9 Aug
Slide 71: Transurban
transurban