Slide 1: Transurban Investor Presentation
asx release 11 February 2016 For personal use only Transurban Investor Presentation Please find attached the Investor Presentation that will be given to analysts this morning. Julie Galligan Company Secretary For further information please contact: Jessica O’Brien Investor Relations Manager +613 865
Slide 2: 1H16 Results
For personal use only 1H16 RESULTS 1
Slide 3: Disclaimer and Basis of Preparation
For personal use only 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 Trans
Slide 4: Half-Year in Review
For personal use only HALF-YEAR IN REVIEW 3
Slide 5: 1H16 Highlights
For personal use only 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 enhan
Slide 6: 1H16 Activity
For personal use only 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 Sydne
Slide 7: 1H16 Network Performance
For personal use only 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 t
Slide 8: Distribution Growth
For personal use only 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,
Slide 9: Strategy
For personal use only 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 10: Project Pipeline
For personal use only 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 - $4.0 billion)
Slide 11: Major Project Delivery
For personal use only MAJOR PROJECT DELIVERY RISK MANAGEMENT PROCUREMENT METHODOLOGY • Majority of construction risk held by tier one contractors • Robust and competitive EOI/RFP process • Fixed price and fixed time performance based contracts • Outcome based procurement process to drive efficiency
Slide 12: Safety Highlights
For personal use only SAFETY HIGHLIGHTS CASE STUDY – PUBLIC SAFETY HIGHLIGHTS • Transurban has awarded an innovation grant to a team at the University of Perlite Metal • Continued focus on RICI; observed Newcastle Syntactic Foam 10.4% reduction in 1H16 compared to 1H15 • New material for road safety
Slide 13: Commitment to Sustainability
For personal use only COMMITMENT TO SUSTAINABILITY BE GOOD NEIGHBOURS USE LESS THINK LONG TERM • Community grants and investment • Commitment to reduce energy usage • Governance frameworks for our program by 10% by 2023 development projects use the o Major sponsor of ‘Run for the Kids’, Infrastructu
Slide 14: Strategic Technology Partnerships
For personal use only STRATEGIC TECHNOLOGY PARTNERSHIPS TESTED REAL-LIFE SCENARIOS IN OCTOBER 2015 AUTONOMOUS VEHICLE TESTING • Partnered with Virginia Tech and VDOT to End – Washington D.C. border test an autonomous vehicle in a real life scenario on Transurban’s Northern Virginia network Stopping
Slide 15: Financial Results
For personal use only FINANCIAL RESULTS 14
Slide 16: Statutory Results Summary
For personal use only STATUTORY RESULTS SUMMARY 1H16 ($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 • $58 million increase from Legacy Way and 95 Express Lanes Net profit/(los
Slide 17: Proportional Results Summary
For personal use only PROPORTIONAL RESULTS SUMMARY 1H16 1H15 ($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% Tot
Slide 18: EBITDA Movement
For personal use only 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 19: Cost Movement
For personal use only 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
Slide 20: Network EBITDA Margins
For personal use only 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%
Slide 21: Free Cash Flow
For personal use only 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 eli
Slide 22: Diversification of Funding Sources
For personal use only 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 n
Slide 23: Market Update
For personal use only MARKET UPDATE 22
Slide 24: Sydney Network
For personal use only 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
Slide 25: Melbourne Network
For personal use only 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
Slide 26: Brisbane Network
For personal use only 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 $108 million and • Construction commenced transacti
Slide 27: Northern Virginia Network
For personal use only NORTHERN VIRGINIA NETWORK I-66 I-395 • Competitive process • Agreed development underway to design, build, framework with VDOT to finance, operate and progress 395 Express maintain Express Lanes Lanes project system on I-66 • Estimated project cost • Transurban shortlisted to a
Slide 28: Summary and Outlook
For personal use only SUMMARY AND OUTLOOK 1H16 SUMMARY FY16 OUTLOOK • Continued double digit earnings growth • Distribution guidance upgraded to 45.5 cps, 13.8% growth year-on-year o EBITDA growth of 14.6%1 • Focus on operational efficiencies to improve • Demonstrated value of network positions netw
Slide 29: Supplementary Information
For personal use only SUPPLEMENTARY INFORMATION 28
Slide 30: Contents
For personal use only CONTENTS 1 DETAILED FINANCIALS 2 TREASURY 3 CORPORATE OVERVIEW 4 DEVELOPMENT OPPORTUNITIES 5 GLOSSARY 6 CALENDAR 29
Slide 31: Detailed Financials
For personal use only DETAILED FINANCIALS 30
Slide 32: Statutory Results
For personal use only STATUTORY RESULTS 1H16 ($M) 1H15 ($M) % CHANGE Toll revenue1 919 786 16.9% Construction revenue 107 152 (29.6%) Other revenue 30 26 15.4% Total revenue 1,056 964 9.5% Employee benefit expense (59) (56) (5.4%) Road operating costs (148) (113) (31.0%) Construction costs (107) (15
Slide 33: Proportional Results
For personal use only PROPORTIONAL RESULTS PROPORTIONAL EARNINGS 1H16 ($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
Slide 34: 1H16 Proportional Result by Asset
For personal use only 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
Slide 35: 1H15 Proportional Result by Asset
For personal use only 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 $M 100.0% M2 113 1 94 (41) (17) 36 6 42 100.0% LCT 40 - 25 (12) (6) 7 (3) 4 100.0% CCT 28 - 16 (12) (6) (
Slide 36: Net Finance Costs
For personal use only NET FINANCE COSTSTO BE COMPLETED STATUTORY NET FINANCE COST EXPENSE PROPORTIONAL NET FINANCE COST PAID 1H16 ($M) 1H15 ($M) 1H16 ($M) 1H15 ($M) Controlled assets CityLink (13) (14) (8) (12) M2 (21) (17) (17) (24) LCT (6) (6) (5) (5) CCT (7) (6) (6) (3) ED (19) (20) (12) (12) DRI
Slide 37: Maintenance Provision
For personal use only MAINTENANCE PROVISION1 MAINTENANCE EXPENSE RECOGNISED MAINTENANCE CASH SPEND 1H16 ($M) 1H15 ($M) 1H16 ($M) 1H15 ($M) CityLink (7) (7) (7) (3) M2 (3) (3) (2) (3) LCT (3) (3) (6) (2) CCT (2) (3) (1) - ED (4) (6) (4) (12) M5 (3) (2) - - M7 (4) 1 (1) - Gateway Motorway (6) (3) (2)
Slide 38: Free Cash Calculation
For personal use only FREE CASH CALCULATION FREE CASH CALCULATION SOURCE OF INFORMATION/EXPLANATION Cash flows from operating activities Statutory Transurban Holdings Limited operating cash flow (includes cash inflow from M7 TLNs and M5 loan notes). (refer Group Statutory accounts) Add back transact
Slide 39: Free Cash Flow Reconciliation
For personal use only FREE CASH FLOW RECONCILIATION OF STATUTORY CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH Half-year ended Half-year ended 31 December 2015 31 December 2014 ($M) ($M) Cash flows from operating activities (refer Group Statutory accounts) 430 (27) Add back transaction and integr
Slide 40: Reconciliation of Free Cash
For personal use only 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
Slide 41: Tax Profile
For personal use only 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 SIGNIFICAN
Slide 42: Treasury
For personal use only TREASURY 41
Slide 43: Funding Structure at December 2015
For personal use only 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$0.1B USPP Wor
Slide 44: Group Debt at December 2015
For personal use only GROUP DEBT AT 31 DECEMBER 2015 FACILITY FACILITY TOTAL FACILITY PROPORTIONAL STATUTORY DRAWN (US$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
Slide 45: Drawn Debt
For personal use only 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$300 million AUD bonds repaid in Corporate 3,938 4,297 (359) November 2015 using Euro bond proceeds raised in May 2015.
Slide 46: Key Debt Metrics
For personal use only KEY DEBT METRICS 31 DEC 2015 30 JUN 2015 TRANSURBAN NON TRANSURBAN NON GROUP CORPORATE RECOURSE GROUP CORPORATE RECOURSE Weighted average maturity (years)1 9.1 yrs 6.0 yrs 11.0 yrs2 7.8 yrs 5.0 yrs 9.7 yrs3 Weighted average cost of AUD debt4 5.5% 5.8% 5.2% 5.3% 5.6% 5.1% Weight
Slide 47: Extension of Debt Maturity Profile
For personal use only EXTENSION OF DEBT MATURITY PROFILE JUNE 2015 MATURITY PROFILE 3,500 EXISTING DEBT 3,000 REFINANCED DURING 1H16 2,500 A$ 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 va
Slide 48: Corporate Debt Maturities
For personal use only 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 20
Slide 49: Non Recourse Debt Maturities
For personal use only 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 1,00
Slide 50: Corporate Overview
For personal use only CORPORATE OVERVIEW 49
Slide 51: The Value of the Network
For personal use only 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 manageme
Slide 52: Summarised Group Structure
For personal use only 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
Slide 53: Operating Asset Portfolio
For personal use only 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 4
Slide 54: Operating Asset Portfolio
For personal use only 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
Slide 55: Tolling Escalation
For personal use only 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 Escalate
Slide 56: Enforcement Process
For personal use only 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, outbou
Slide 57: Safety
For personal use only 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 co
Slide 58: Development Opportunities
For personal use only DEVELOPMENT OPPORTUNITIES 57
Slide 59: Western Distributor
For personal use only 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
Slide 60: Logan Enhancement Project
For personal use only 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 Compto
Slide 61: AirportlinkM7
For personal use only 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 Brisban
Slide 62: Express Lanes
For personal use only 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 •
Slide 63: Express Lanes Southern Extension
For personal use only 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 • Financ
Slide 64: I-66 Express Lanes
For personal use only 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 Augu
Slide 65: Glossary
For personal use only GLOSSARY 64
Slide 66: Glossary
For personal use only 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 M
Slide 67: Glossary
For personal use only 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
Slide 68: Glossary
For personal use only 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
Slide 69: Glossary
For personal use only 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. Cu
Slide 70: Calendar
For personal use only CALENDAR 69
Slide 71: 2016 Calendar
For personal use only 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 Res
Slide 72: For personal use only
For personal use only 71