Transurban Group Ltd. · ASX:TCL
Transurban — Merger or Acquisition (November 2015)
57 slides from Transurban's merger presentation, Nov 24, 2015
Slide 1: AirportlinkM7 Acquisition and Equity Raising
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA AIRPORTLINKM7 ACQUISITION AND EQUITY RAISING 24 NOVEMBER 2015
Slide 2: Disclaimer
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA DISCLAIMER This investor presentation (“Presentation”) has been prepared by Transurban Holdings Limited (ACN 098 143 429) (“THL”), Transurban International Limited (ACN 121 746 825) (“TIL”) and Transurban Infrastructure Management Limit
Slide 3: Disclaimer
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA DISCLAIMER PAST PERFORMANCE Past performance and pro forma historical financial information in this Presentation is given for illustrative purposes only and should not be relied on and is not an indication of future performance includin
Slide 4: Disclaimer
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA DISCLAIMER DISCLAIMER No party other than Transurban has authorised or caused the issue, lodgement, submission, dispatch or provision of this Presentation, or takes any responsibility for, or makes or purports to make any statements, re
Slide 5: Contents
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA CONTENTS 1 TRANSACTION SUMMARY 2 TRANSURBAN OVERVIEW 3 AIRPORTLINKM7 4 ENTITLEMENT OFFER 5 KEY RISKS 6 INTERNATIONAL SELLING RESTRICTIONS 7 KEY FINANCIALS 5
Slide 6: 1. Transaction Summary
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA 1. TRANSACTION SUMMARY
Slide 7: Transaction Summary
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA TRANSACTION SUMMARY OVERVIEW Transurban Queensland has reached agreement to acquire AirportlinkM7 for $1.87 billion, plus stamp duty of $108 million and transaction costs of $23 million1 Transurban owns 62.5% of Transurban Queenslan
Slide 8: Aligned with Strategy
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA ALIGNED WITH 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 DELI
Slide 9: Enhanced Network
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA ENHANCED NETWORK ENHANCES EXISTING Transurban Queensland will own and operate 6 NETWORK FOOTPRINT assets in Queensland, including 3 assets adjacent to AirportlinkM7 \ ESTABLISHED AirportlinkM7 opened to traffic July 2012 OPERATING H
Slide 10: Brisbane Market
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA BRISBANE MARKET BRISBANE ECONOMY DIVERSIFIED Key Statistics – Brisbane Brisbane Industry by Number of Individuals Employed (2011)4 Public Administration and Safety Population Education & Training 2.3 million (2014)1 9% 8% Construction P
Slide 11: Distribution Growth
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA DISTRIBUTION GROWTH DISTRIBUTION GUIDANCE OF 44.5 CPS FOR FY16 REAFFIRMED 1H16 distribution of 22.5 cps to be paid on 12 February 2016 FY16 distribution guidance of 44.5 cps reaffirmed1 FY16 distribution expected to be approximately
Slide 12: 2. Transurban Overview
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA 2. TRANSURBAN OVERVIEW
Slide 13: Transurban Network Positions
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA TRANSURBAN NETWORK POSITIONS NEW SOUTH WALES NSW VIC QLD1 USA2 QUEENSLAND Number of 6 1 6 2 assets % of Transurban FY15 pro forma 41.5% 35.8% 18.5% 4.2% proportional toll revenue3 VICTORIA USA 1. Inclusive of AirportlinkM7. Legacy Way o
Slide 14: Network Development in Each Market
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA NETWORK DEVELOPMENT IN EACH MARKET NSW Construction has started on NorthConnex, a $3 billion 9km twin tunnel motorway linking the M1 Pacific Motorway and Hills M2 \ VIC Construction has started on the $1 billion CityLink Tulla Widen
Slide 15: Capital Strategy
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA CAPITAL STRATEGY CONSISTENTLY EFFICIENTLY FUND MAINTAIN STRONG COST EFFICIENT GROWING GROWTH INVESTMENT GRADE FUNDING THROUGH DISTRIBUTIONS CREDIT METRICS MARKET CYCLES PRUDENT USE OF BALANCE SHEET 30 JUNE 2015 PRO FORMA Raised $3.96
Slide 16: 3. AirportlinkM7
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA 3. AIRPORTLINKM7
Slide 17: Asset Overview
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA ASSET OVERVIEW AirportlinkM7 Length 6.7km Lane Kilometres 43.4km Total Build Cost1 $3.7 billion AADT (FY15) 50,854 AADT (FY16 YTD) 55,554 Toll Escalation2 Brisbane CPI annually Opening Date July 2012 Concession End July 2053 FINANCIAL P
Slide 18: Uplift in AirportlinkM7 FY16 Earnings
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA UPLIFT IN AIRPORTLINKM7 FY16 EARNINGS AIRPORTLINKM7 AADT AND Y-O-Y GROWTH 2015 AADT (‘000) OPENING OF LEGACY WAY Y-O-Y Growth FY16 AADT OVERVIEW 60 10% FY15 AADT Y-O-Y Growth 8% Key developments in FY16 have 55 6% improved asset going
Slide 19: Comparable Transactions
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA COMPARABLE TRANSACTIONS SELECTED COMPARABLE TRANSACTIONS (EV / EBITDA) AirportlinkM7 (Nov-15) 28.0x EV/EBITDA multiple of 28.0x based on annualised FY16 quarter 1 EBITDA5, which Chicago Skyway (Nov-15)1 37.3x reflects the following ke
Slide 20: Traffic and Revenue History
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA TRAFFIC AND REVENUE HISTORY AIRPORTLINKM7 TRAFFIC AND REVENUE FY13 – FY16 YTD OVERVIEW Revenue has increased 144% since AADT (’000) FY13 which reflects the removal of the OPENING OF Toll revenue ($M) LEGACY WAY discount toll period on
Slide 21: Opportunity for Margin Enhancement
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA OPPORTUNITY FOR MARGIN ENHANCEMENT TOLLING & Draw on Transurban’s internal capability to MARGIN ENHANCEMENT CUSTOMER improve Opportunity for cost reductions and revenue growth on MANAGEMENT o Call centre operations AirportlinkM7 o C
Slide 22: AirportlinkM7 Integration
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA AIRPORTLINKM7 INTEGRATION TQ ACQUISITION IMPACT ON TQ INTEGRATION Integration of TQ is proceeding in line NOW with expectations ORGANISATION STRUCTURE Substantial synergies expected to be (TQ) (ALM7) achieved at AirportlinkM7 throug
Slide 23: 4. Entitlement Offer
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA 4. ENTITLEMENT OFFER
Slide 24: Entitlement Offer Key Details
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA ENTITLEMENT OFFER KEY DETAILS STRUCTURE Fully underwritten 1 for 18 accelerated pro-rata renounceable Entitlement Offer with retail entitlements trading (PAITREO) AND SIZE to raise gross proceeds of approximately $1.025 billion RANKING
Slide 25: Funding Sources and Uses
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA FUNDING SOURCES AND USES ACQUISITION FUNDING ($ million) SOURCES USES Transurban equity – 62.5% 657 AirportlinkM7 acquisition price1 1,870 AustralianSuper equity – 25.0% 263 Stamp duty 108 Tawreed equity –12.5% 131 Consortium transactio
Slide 26: Offer Timetable
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA OFFER TIMETABLE DATES AND TIMES ARE SUBJECT TO CHANGE WITHOUT NOTICE Announcement of acquisition and Entitlement Offer, trading halt and Institutional Entitlement Offer opens 24 November 2015 Announcement of completion of Institutional
Slide 27: 5. Key Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA 5. KEY RISKS
Slide 28: Key Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA KEY RISKS • This section discusses some of the key risks associated with any investment in Transurban which may affect the value of Transurban securities. The risks set out below are not listed in order of importance and do not necessar
Slide 29: Business Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA BUSINESS RISKS Transurban’s concession agreements have finite lives • Transurban’s business is dependent on concession agreements that have been granted to members of the Transurban group, or entities in which Transurban has an interest
Slide 30: Business Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA BUSINESS RISKS Revenue collection • Transurban collects and processes revenue using a variety of tolling systems including information technology systems and is reliant on the reliable and efficient operation and maintenance of those to
Slide 31: Business Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA BUSINESS RISKS • Transurban’s failure to successfully implement planned maintenance and capital expenditure projects in the manner or within the timeframe and budget expected, or the occurrence of any unexpected maintenance or capital e
Slide 32: Business Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA BUSINESS RISKS Competing roads • The presence of other toll roads, toll-free roads and competing modes of transportation depends in part on governmental policy. In general, the concession agreements do not prevent the relevant governmen
Slide 33: Business Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA BUSINESS RISKS • The success of any such acquisitions or developments depends on a variety of factors including the limited supply of viable road assets that meet Transurban’s acquisition and development requirements and there can be no
Slide 34: Business Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA BUSINESS RISKS Refinancing risks and use of leverage • Transurban has existing debt financing arrangements and credit facilities from bank, debt capital market and government sources. Transurban will need to continue accessing debt mark
Slide 35: Business Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA BUSINESS RISKS Payment of distributions • Future payment of distributions will be determined by the Board of Transurban. Transurban will pay distributions having regard to the free cash flow and financial position of Transurban and ther
Slide 36: AirportlinkM7 Acquisition Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA AIRPORTLINKM7 ACQUISITION RISKS Completion risks • Completion of the acquisition of AirportlinkM7 (“AirportlinkM7 Acquisition”) is conditional on certain matters including DTMR consent, ACCC approval and the novation of contracts requir
Slide 37: AirportlinkM7 Acquisition Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA AIRPORTLINKM7 ACQUISITION RISKS Analysis of AirportlinkM7 Acquisition opportunity • Transurban has undertaken financial, operational, asset condition, business and other analysis in respect of AirportlinkM7 in order to determine its att
Slide 38: Offer and General Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA OFFER AND GENERAL RISKS Underwriting risk • Transurban has entered into an underwriting agreement under which two underwriters have agreed to fully underwrite the Entitlement Offer, subject to the terms and conditions of the underwritin
Slide 39: Offer and General Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA OFFER AND GENERAL RISKS Renouncement risk • If you are an eligible security holder, and you do not take up or sell your entitlements under the Entitlement Offer, then your entitlements will be treated as renounced and will be sold on yo
Slide 40: Offer and General Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA OFFER AND GENERAL RISKS Market generally • The price of Transurban securities on the ASX may rise or fall due to numerous factors, including: o Australian and international general economic conditions, including inflation rates, the lev
Slide 41: Offer and General Risks
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA OFFER AND GENERAL RISKS Changes in law or regulation • Governments may impose new or increased charges on road transportation, on motorists or motor vehicles or fuel. In addition, Governments may restrict or prohibit the levying of toll
Slide 42: 6. International Selling Restrictions
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA 6. INTERNATIONAL SELLING RESTRICTIONS
Slide 43: International Selling Restrictions
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA INTERNATIONAL SELLING RESTRICTIONS New Zealand Neither this document nor any of the accompanying documents are an investment statement or prospectus or product disclosure statement under New Zealand law and have not been registered, fil
Slide 44: International Selling Restrictions
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA INTERNATIONAL SELLING RESTRICTIONS Canada This document, any accompanying document and the New Securities described therein may only be distributed to Canadian-residents in Alberta, British Columbia, Ontario or Québec that are both (1)
Slide 45: International Selling Restrictions
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA INTERNATIONAL SELLING RESTRICTIONS Section 138 of the Securities Act (Ontario) provides that no action shall be commenced to enforce these rights more than: a) in the case of an action for rescission, 180 days after the date of the tran
Slide 46: International Selling Restrictions
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA INTERNATIONAL SELLING RESTRICTIONS Hong Kong WARNING: The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to this document. If you are in any doubt
Slide 47: International Selling Restrictions
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA INTERNATIONAL SELLING RESTRICTIONS i. to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or (in the case of such corporation) where the transfer arises from an offer referred to in Section 276(3)(
Slide 48: International Selling Restrictions
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA INTERNATIONAL SELLING RESTRICTIONS United Arab Emirates (excluding the Dubai International Financial Centre) Pursuant to the Securities and Commodities Authority’s (“SCA”) Board of Directors Resolution No.37 of 2012 Concerning the Regul
Slide 49: 7. Key Financials
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA 7. KEY FINANCIALS
Slide 50: Basis of Preparation
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA BASIS OF PREPARATION The financial information included in this Presentation includes pro forma adjustments. The pro forma financial information is based on an aggregation of: Transurban financial information as extracted from the aud
Slide 51: Basis of Preparation
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA BASIS OF PREPARATION Free cash flow available for distributions Transurban’s free cash is calculated as: Cash flow from operating activities Add back transaction and integration costs related to acquisitions (non 100% owned entities
Slide 52: Statutory Results – Pro Forma
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA STATUTORY RESULTS – PRO FORMA FY15 FY14 STATUTORY RESULTS DEBT / DEBT / EQUITY EQUITY TCL ALM71 FUNDING PRO FORMA TCL TQ ALM71 FUNDING PRO FORMA Toll revenue 1,514 83 – 1,597 906 370 70 – 1,346 Fee and other revenue 156 8 – 164 134 33 5
Slide 53: Proportional Results – Pro Forma
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA PROPORTIONAL RESULTS – PRO FORMA FY15 FY14 PROPORTIONAL EBITDA TCL ALM7 PRO FORMA TCL TQ ALM7 PRO FORMA Toll revenue 1,559 52 1,611 1,117 232 44 1,393 Fee revenue 115 5 120 93 19 3 115 Other revenue 52 – 52 22 1 – 23 Total revenue 1,726
Slide 54: Free Cash Flow – Pro Forma
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA FREE CASH FLOW – PRO FORMA FY15 FY14 DEBT / DEBT / FREE CASH FLOW EQUITY EQUITY TCL ALM71 FUNDING PRO FORMA TCL TQ ALM71 FUNDING PRO FORMA Free cash ($M) 768 13 19 801 572 100 2 20 693 Underlying free cash per security (cents) – weighte
Slide 55: Consolidated Balance Sheet – Pro Forma
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA CONSOLIDATED BALANCE SHEET – PRO FORMA AS AT 30 JUNE 2015 ($M) DEBT/ EQUITY PRO TCL ALM71 FUNDING FORMA ASSETS Cash and cash equivalents 1,249 – – 1,249 Intangible assets 17,320 1,878 – 19,198 Property, plant and equipment 249 – – 249 O
Slide 56: Detailed Map
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA DETAILED MAP 56
Slide 57: Glossary
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA GLOSSARY TERM DEFINITION TERM DEFINITION 1H16 Period from 1 July to 1 December 2015 M Million AADT Annual Average Daily Traffic New Securities Transurban securities issued pursuant to the Offer ACCC Australian Competition and Consumer C