Transurban Group Ltd. · ASX:TCL

Transurban — Investor Day (May 2017)

69 slides from Transurban's investor day presentation, May 4, 2017

1. Slide 1: Transurban Investor Day Presentation ASX release

   asx release 4 May 2017 For personal use only TRANSURBAN INVESTOR DAY PRESENTATION Please find attached the investor presentation and NorthConnex information booklet that will be provided at the Transurban Investor Day today. The presentation will be webcast live from 9:30am AEST on the Transurban we

2. Slide 2: Transurban Investor Day 2017

   For personal use only Transurban Investor Day 2017 4 May 2017

3. Slide 3: Investor Day overview

   Investor Day overview For personal use only  Position, growth and enhancing  Melbourne: outcome focused for social licence stakeholders Scott Charlton Vin Vassallo  Capital positioning for growth  Brisbane: network benefits Adam Watson Wesley Ballantine  Panel Q&A  Sydney: data-driven excellen

4. Slide 4: Our Executive Committee

   Our Executive Committee For personal use only Scott Charlton Adam Watson Tony Adams Jennifer Aument Wesley Ballantine Chief Executive Officer Chief Financial Officer GGM, Project Delivery and GGM, North America GGM, Queensland Operational Excellence Andrew Head Michele Huey Sue Johnson Lisa Tobin Vi

5. Slide 5: Position, growth and enhancing social licence

   For personal use only Scott Charlton Position, growth and enhancing social licence

6. Slide 6: Our strategy

   Our strategy For personal use only Network planning Community Development & forecasting engagement & delivery To be the partner of choice with governments providing effective and innovative urban road infrastructure and services utilising core capabilities Technology Operations Customer management 5

7. Slide 7: Strategy remains constant but continued success requires agility

   Strategy remains constant but continued success requires agility For personal use only Small, considered shifts in applications of strategy Transurban’s IP in services and operations Development pipeline in Australia and potentially deployed to 3rd party assets North America an opportunity for assoc

8. Slide 8: Macro environment shifting—economic, community, political & technology

   Macro environment shifting— economic, community, political & technology For personal use only Economic Community Political Technology Australia:  Trust has become a Australia:  Pace and magnitude of critical issue for change creates  Eastern states, particularly corporates to manage  Infrastruct

9. Slide 9: Macro environment shifting—risk appetite

   Macro environment shifting— risk appetite For personal use only Pre-GFC (2004-2008) Post-GFC (2009-2015) 2016 to present Traffic risk Financial & structuring risk Risk appetite1 Operational risk Construction risk 1. Transurban view. 8

10. Slide 10: Investment dynamics—different drivers underpinning models

    Investment dynamics— different drivers underpinning models For personal use only Financial adviser / Pension funds Owner / operators Contractor / operators asset manager Core skills /  Investment  Network planning  Traffic forecasting  Financial structuring  Corporate governance  Construction

11. Slide 11: Macro environment shifting: Transurban will remain disciplined

    Macro environment shifting Transurban will remain disciplined For personal use only Pre-GFC (2004-2008) Post-GFC (2009-2015) 2016 to present Potential for higher Consortiums led by risk models led by financial advisors / financial advisors / asset managers and asset managers and contractors Signific

12. Slide 12: Portfolio growth not reliant on M&A

    Portfolio growth not reliant on M&A For personal use only  All projects in $9 billion pipeline are in exclusive negotiations  Transurban’s networks provide opportunities to expand development pipeline  Portfolio growth is not reliant on M&A 1,800 1,600 Transurban capital contribution 1,400 1,200

13. Slide 13: Continued growth reliant on maintaining and enhancing social licence

    Continued growth is reliant on maintaining and enhancing social licence For personal use only Community Employees Transurban’s stakeholder map Government Customers Business partners Investors 12

14. Slide 14: Capital positioning for growth

    For personal use only Adam Watson Capital positioning for growth

15. Slide 15: Capital strategy

    14 Capital strategy For personal use only  Maintain strong investment grade credit metrics  Cost efficient funding through market cycles  Efficiently fund growth  Consistently growing distributions while creating long term value 14

16. Slide 16: Observations capital markets

    Observations capital markets For personal use only Global demand for high- Liquidity to support Rising interest rate quality infrastructure investment requirements outlook from a  Infrastructure remains  Diversified sources of capital historically low base attractive to global investors available

17. Slide 17: Strong investment grade credit metrics

    Strong investment grade credit metrics For personal use only  Prudent management of funding to ensure Expansion of balance sheet over time1 strong investment grade credit metrics are S&P / Moody’s credit rating maintained, using equity as required A / A2  Transurban’s business model creates a FFO/

18. Slide 18: Hedged against rising interest rates and protected against low inflation

    Hedged against rising interest rates and protected against low inflation For personal use only Transurban interest rate hedging profile1 Inflation-linked toll pricing, with upside4,5 18,000 GWA Sydney Brisbane Corporate Fixed amount 16,000  99.6% interest rate hedged at 14,000 31 March 2017 9%  He

19. Slide 19: Longer tenor low cost of funding

    Longer tenor low cost of funding For personal use only Weighted average maturity (Group) 1 9.1 years 9.3 years 9.3 years A key component of our capital 7.8 years 8.7 years 7.5 years 7.6 years strategy has been to increase the weighted average tenor of debt Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 M

20. Slide 20: Diversification of funding sources

    Diversification of funding sources For personal use only June 2014 Group debt1 March 2017 Group debt1  Refinancing bank debt into capital markets debt provides diversity and enables extension of average tenor of debt — a key component of our capital strategy ─ Reduced dependency on bank debt (from

21. Slide 21: Balance sheet to fund growth

    Balance sheet to fund growth For personal use only June 2016 maturity profile2,3,4  Large refinancing completed to provide significant bank debt  Debt refinanced during the period capacity for new issuances to support development pipeline 5,000 4,000  Earnings growth underpins balance sheet expan

22. Slide 22: Capital management

    Capital management For personal use only DPS  Compound annual growth of greater than 10% since FY09 51.5c 45.5c 40.0c 31.0c 35.0c 27.0c 29.5c 22.0c 24.0c  Actual  Guidance FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17  Supported by the four pillars of earnings growth: traffic, price, operational

23. Slide 23: Growth potential in North America

    For personal use only Jennifer Aument Growth potential in North America

24. Slide 24: North America strategy

    North America strategy For personal use only  Maintain focus on heavily-congested, urban areas with strong demographics  Continue to leverage core capabilities and apply a long-term partnership approach  Prepare to effectively respond to changing market conditions and availability of distressed a

25. Slide 25: North America macro environment

    North America macro environment For personal use only Economic Community Political  Increasing household  Increasing customer  Virginia elections in 2017 will income levels driving demands for service, appoint key leadership consumer purchasing information and choices positions including a new po

26. Slide 26: Growing adoption of P3s across sectors

    Growing adoption of P3s across sectors For personal use only Total equity value of all transactions All non-highway P3 projects since January 2015 USA and Canada Airports Car parks Education Facilities Healthcare Highway Housing Ports Transit Water Post financial / Waste close Procurement 0 1 2 3 4

27. Slide 27: Long-term market potential

    Long-term market potential USA private toll road mileage exceeds Australia For personal use only Total toll mileage, Australia versus USA 6,000 5,000 Policy changes and Road miles 4,000 other dynamics could open up 3,000 market for private investment 2,000 1,000 Public toll 0 Private toll1 2005 AU 2

28. Slide 28: Appetite for innovation among public toll agencies

    Appetite for innovation among public toll agencies For personal use only Notable public sector tolling developments since January 2015 Public tolling agencies continue to advance traditional and innovative projects including:  converting to fully-electronic tolling  advancing interoperability  op

29. Slide 29: Strategic implications for Transurban

    Strategic implications for Transurban For personal use only Market fundamentals remain  Maintain focus on key markets with demographics aligned to Transurban’s  Project pipeline slow to develop due to regulatory and political barriers strategy  Public funding through municipal bond market  Conti

30. Slide 30: Outcome focused for stakeholders

    For personal use only Vin Vassallo Outcome focused for stakeholders

31. Slide 31: Melbourne strategy

    Melbourne strategy For personal use only  Increase network capacity and efficiency through development of existing infrastructure  Enhance the liveability of local communities  Further explore opportunities to provide managed motorway services to assets adjacent to Transurban’s Victorian network

32. Slide 32: Melbourne macro environment

    Melbourne macro environment For personal use only Economic Community Political  Fastest growing state economy  Network-wide road congestion  Political focus will increasingly with nation-leading growth in and public transport services shift to next election due in population and jobs remain a key

33. Slide 33: Outcome focused for stakeholders

    Outcome focused for stakeholders For personal use only  Ability to apply and deploy learnings from across the business: ̶ Operations excellence ̶ Design, construction and project management ̶ Community and stakeholder engagement  Active period for Victoria with: ̶ Two live construction projects—CT

34. Slide 34: Preparing for enhanced operations

    Preparing for enhanced operations For personal use only O&M planning for WGTP drawing on successes from across the business  O&M team members integrated into CTW, WGTP project Significant improvement in incident delivery teams response time – Ensuring long-term considerations embedded in planning p

35. Slide 35: Design, construction and project management

    Design, construction and project management For personal use only Applying lessons from current projects to WGTP  High-quality urban design solution – Flatter, longer gradient design allowing vehicles to maintain travel speed, improving safety and reducing emissions – Sustainability features from N

36. Slide 36: Community engagement

    Community engagement West Gate Tunnel Project Five Phase Community For personal use only Engagement WGTP builds on successful NCX program 2015  Five-phase community engagement 1 Proposal design (complete) – Increased transparency from project outset about opportunities for feedback and how it infor

37. Slide 37: Network benefits

    For personal use only Wesley Ballantine Network benefits

38. Slide 38: Brisbane strategy

    Brisbane strategy For personal use only  Complete integration—final O&M arrangements and technology  Improve processes and deploy technology across the network to enhance the customer experience  Explore options to add capacity during peak periods and remain open to non-traditional roles 37

39. Slide 39: Brisbane macro environment

    Brisbane macro environment For personal use only Economic Community Political  Returning to trend growth  Industry support for alignment  Government willingness to following latest resources cycle: of tolls in return for productivity partner with private sector for − Population benefits improved

40. Slide 40: Network benefits

    Network benefits For personal use only Network position enables Transurban to deliver optimal outcomes for Brisbane Transurban asset Managed upgrade Construction works/upgrade Integration Organisational O&M “Steady state” restructure restructure GLIDe operations across all Acquisition complete annou

41. Slide 41: Network-wide operations and maintenance driving enhanced outcomes

    Network-wide operations and maintenance driving enhanced outcomes For personal use only O&M tunnel cost Holistic O&M approach forecast savings Routine Asset  Tunnel network incident response and maintenance strategy & condition >25% saving maintenance contracts awarded to Egis Network Intelligent 

42. Slide 42: Customer benefits from continued network investments

    Customer benefits from continued network investments For personal use only  Material improvements in customer service 95% of customer issues − Call handling times and quality resolved at first point of − More than 1,000 in-person retail outlets contact  Process improvements resulting in material f

43. Slide 43: Leveraging position for growth

    Leveraging position for growth For personal use only 3  Network remains in need of significant investment in highly congested corridors: 1. Centenary / Western Freeway 2. Pacific Motorway 4 3. Bruce Highway 4. CBD accessibility  Ability to apply core competencies for network benefits: − ICB O&M −

44. Slide 44: Data-driven excellence

    For personal use only Andrew Head Data-driven excellence

45. Slide 45: Sydney strategy

    Sydney strategy For personal use only  Work with government partners to provide transport solutions  Engage and strengthen relationships with local communities  Demonstrate outstanding project management on current / future construction projects  Prepare to participate in network growth opportun

46. Slide 46: Sydney macro environment

    Sydney macro environment For personal use only Economic Community Political  Low interest rates have  Population and economic  Largest program of supported significant growth justify the recent and Government infrastructure housing investment continuing investment in spending in NSW since infrast

47. Slide 47: Data-driven excellence

    Data-driven excellence For personal use only  Real-time network management ̶ Understanding how motorists use our roads Toll gantries to benefit the network as a whole  Asset development Road sensors ̶ Monitoring emerging network friction points to implement solutions earlier  New project applicat

48. Slide 48: Network management

    Network management For personal use only Data-driven initiatives that improve the performance of our networks day-to-day Inputs Components Benefits Time and operational savings  Real-time data  Demand  Asset optimisation − Speed − Ramp metering − Increased throughput − Volume (flow) − Dynamic pri

49. Slide 49: Asset development

    Asset development For personal use only (Under Construction) Our in-house traffic modelling team uses proprietary systems to understand network friction points and determine the optimal time to deploy capital M2 integration  Analysis of M2 travel speeds highlighted delays at Pennant Hills Road inte

50. Slide 50: New project application

    New project application For personal use only Data-driven IP drawn from across the business and network operations informs bidding and new project decision making Knowledge of urban transport characteristics  In-house traffic modelling team comprises 35 specialists  Traffic models informed by land

51. Slide 51: Analyst data pack

    For personal use only Analyst data pack

52. Slide 52: Transurban history

    Transurban history For personal use only 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 CityLink M1-CityLink Upgrade CityLink-Tulla Widening Hills M2 Hills M2 Upgrade M7 ED & M51 M5 Widening Lane Cove Tunnel Cross City Tunnel Gateway, Logan, Clem7 & Go Between B

53. Slide 53: Summarised Group structure

    Summarised Group structure For personal use only 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 hold

54. Slide 54: Asset portfolio March 2017

    Asset portfolio 31 March 2017 For personal use only MELBOURNE SYDNEY OVERVIEW CITYLINK M5 M2 ED M7 NCX LCT CCT Under Opening date Dec 2000 Aug 1992 May 1997 Dec 1999 Dec 2005 Mar 2007 Aug 2005 construction Remaining concession period 18 years 10 years 31 years 31 years 31 years 28 years1 31 years 19

55. Slide 55: Asset portfolio March 2017

    Asset portfolio 31 March 2017 For personal use only BRISBANE GREATER WASHINGTON AREA GATEWAY LOGAN GO BETWEEN LEGACY 495 EXPRESS 95 EXPRESS OVERVIEW CLEM7 AIRPORTLINK M7 MOTORWAY MOTORWAY BRIDGE WAY LANES2 LANES2 Opening date Dec 1986 Dec 1988 Mar 2010 Jul 2010 Jun 2015 Jul 2012 Nov 2012 Dec 2014 Re

56. Slide 56: Tolling escalation

    Tolling escalation For personal use only MOTORWAY ESCALATION CityLink Escalated quarterly by the greater of quarterly CPI or 1.011065% per quarter for the first 16 years (until 31 December 2016), then quarterly by CPI. This is subject to a cap of annual CPI plus 2.5%, which cannot be exceeded. M2 Es

57. Slide 57: Traffic mix

    Traffic mix March quarter 2017 For personal use only Proportion of vehicle class by ADT 100% Cars Large vehicles 50% 0% M2 LCT CCT ED M7 M5 CityLink Gateway Logan ALM7 Clem7 Legacy Go Between Bridge 56

58. Slide 58: Funding structure March 2017

    Funding structure 31 March 2017 For personal use only Transurban Non-Recourse Corporate Debt Sydney Brisbane GWA AMTN Working A$0.3B Capital2 Airportlink 495 Express 95 Express M2 LCT CCT ED M7 M5 TQ M7 Lanes Lanes A$0.9B EMTN €1.6B LCT ED M7 Airportlink M2 CCT M5 AMTN PABs PABs A$0.8B Term Debt A$0

59. Slide 59: Corporate debt maturities March 2017

    Corporate debt maturities 31 March 2017 For personal use only 2,000  Working capital facilities  Term bank deposit  USPP  AMTN  EMTN  144A  Letters of credit 1,800 1,600 1,400 1,200 A$ million 725 1,000 800 233 600 300 798 254 296 733 400 165 833 706 200 219 213 375 300 206 100 125 94 117 - F

60. Slide 60: Non-recourse debt maturities March 2017

    Non-recourse debt maturities 31 March 2017 For personal use only 2,200 TQ (incl ALM7) ED M2 M7 CCT M5 LCT 495 95 2,000 80 1,800 278 1,600 421 1,400 369 294 A$ million 1,200 1,000 350 160 800 85 77 535 300 108 1299 600 225 90 200 75 317 400 845 400 40 225 98 60 100 495 475 116 440 200 405 406 250 279

61. Slide 61: WestConnex project map

    WestConnex project map For personal use only Transurban asset Potential network opportunity Motorway Tunnel 60

62. Slide 62: WestConnex project details

    WestConnex project details For personal use only  Transurban continues to prepare for a WCX sell- down. Scope of sale to Transurban’s approach be determined  Track record of working with industry and government partners to deliver  Competitive process with whole-of-market outcomes significant int

63. Slide 63: Glossary

    For personal use only Glossary

64. Slide 64: Glossary

    Glossary For personal use only ADT Average daily traffic ISCA Infrastructure Sustainability Council of Australia ALM7 AirportlinkM7 KGRIU King Georges Road Interchange Upgrade AUD Australian Dollars KPI Key performance indicator CAD Canadian Dollars KM Kilometre CAV Connected and autonomous vehicle

65. Slide 65: NorthConnex Investor Day tour

    NorthConnex Investor Day tour For personal use only 4 May 2017

66. Slide 66: NorthConnex Investor Day tour itinerary

    NorthConnex Investor Day tour For personal use only Itinerary 1:00 pm Induction and lunch 1:30 pm Board bus 1:45 pm Departure from the Westin Hotel 2:30 pm Arrival and orientation on site at NorthConnex 2:45 pm Site tour 3:45 pm Recap and Q&A opportunity 4:15 pm Board bus 4:30 pm Departure from Nort

67. Slide 67: NorthConnex

    NorthConnex NorthConnex will be twin nine-kilometre tunnels linking the M1 in Sydney’s north to the orbital network and providing a critical missing link to the National Highway route. For personal use only The $3 billion project links the M1 Pacific Key design features Motorway at Wahroonga to the

68. Slide 68: Sustainability

    Sustainability The project has had benefits for regional areas. So far NorthConnex has engaged NorthConnex has been independently more than 40 businesses from the Central For personal use only recognised for its sustainable approach Coast for uniforms, safety training, to design. formwork, concretin

69. Slide 69: Site map

    Site map RICHMOND TO NEWCASTLE HORNSBY BAULKHAM HILLS PENRITH For personal use only BLACKTOWN NORTH PARRAMATTA CHATSWOOD MANLY Northern WAHROONGA RWAY NORTH SYDNEY Ventilation SYDNEY Northern Facility OTO FAIRFIELD CBD PA Interchange IC M BANKSTOWN CIF LIVERPOOL I CIF C HWY PA HURSTVILLE WAHROONGA S

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