Slide 1: FY16 Results
FY16 RESULTS TRANSURBAN FY16 RESULTS 9 AUGUST 2016
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: Year in Review
YEAR IN REVIEW TRANSURBAN FY16 RESULTS | 9 AUGUST 2016 3
Slide 4: Highlights
HIGHLIGHTS • Earnings driven by network traffic growth and portfolio TOLL REVENUE GROWTH1,3 EBITDA GROWTH2,3 development • FY17 distribution guidance of 50.5 cps; growth of 11.0% • Continued focus on network enhancements to improve portfolio performance and customer experience – Technology and O&M 1
Slide 5: FY16 Activity
FY16 ACTIVITY OPERATIONS DEVELOPMENT • AirportlinkM7 integration complete and • Construction on time and on budget for TQ integration progressing ahead of CityLink Tulla Widening, NorthConnex investment case and Gateway Upgrade North • Implementation of GLIDe tolling system • Monash Freeway Upgrade
Slide 6: FY16 Network Performance
FY16 NETWORK PERFORMANCE NETWORK HIGHLIGHTS TOLL REVENUE ADT GROWTH TOLL REVENUE EBITDA CONTRIBUTION GROWTH1 GROWTH2 Sydney • Continued traffic growth across the network • Truck toll multipliers moving to 3 times car tolls on LCT, M5 and M7. Weighted average truck toll multiplier across Sydney 41.1%
Slide 7: Distribution Growth
DISTRIBUTION GROWTH • Total FY16 distribution 103% free cash covered • 2H16 distribution of 23.0 cps to be paid on 12 August 2016 • FY17 distribution guidance of 50.5 cps, growth of 11.0% on FY161 ■ ACTUAL Compound annual growth of greater than 10% since FY09 (inclusive of FY17 guidance) ■ GUIDANCE
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 Customer planning engagement / delivery management / forecasting TRANSURBAN FY16 RESULTS | 9 AUGUST 2016
Slide 9: Multi-Layered Business
MULTI-LAYERED BUSINESS 1. Estimated spend reflects 100% of the total project cost not Transurban’s share. 2. As the 66 Express Lanes is a competitive process, and the 95 Express Lanes Atlantic Gateway Project is in early negotiations, these projects have not been included in Transurban’s $9 billion
Slide 10: Transurban Operates in a Regulated Environment
TRANSURBAN OPERATES IN A REGULATED ENVIRONMENT CONCESSION DEEDS INDEPENDENT REGULATION LIGHT HANDED MONITORING Example Toll roads Utilities including electricity, water, Airports, railway and some ports industries gas Pricing Australian tolls fixed from date of Prices reset periodically (around Pric
Slide 11: Project Pipeline
PROJECT PIPELINE FY17 FY18 FY19 FY20 FY21 FY22 COMMITTED NORTHCONNEX ($1.3 billion) PROJECTS1 CITYLINK TULLA WIDENING ($1.0 billion) WEBB DOCK ACCESS ($3.5 - $4.0 billion) MONASH FREEWAY UPGRADE2 WESTERN DISTRIBUTOR EXCLUSIVE NEGOTIATIONS1,2 LOGAN ENHANCEMENT PROJECT ($281 million) INNER CITY BYPASS
Slide 12: Safety Highlights
SAFETY HIGHLIGHTS Transurban continues to focus on the safety of workers under live traffic situations: • In conjunction with road agencies and key contractors, Transurban is developing a truck mounted attenuators (TMA) standard to ensure they are used in a consistent manner across all regions • Mai
Slide 13: Commitment to Sustainability
COMMITMENT TO SUSTAINABILITY RECOGNITION PROGRESS • Dow Jones Sustainability Index (DJSI): Asia Pacific • Continued commitment to reduce energy usage by 10% Leadership Index recognition for sixth consecutive year by 2023 – Solar panels on CCT and ED control centres • Australian Council of Superannua
Slide 14: Transurban Technology Leadership Case Study
TRANSURBAN TECHNOLOGY LEADERSHIP — CASE STUDY GPS on-board diagnostics technology used in first Australian pilot • Adapted GPS devices to interface with vehicles • Developed and deployed prototype road usage measurement, rating and analysis systems – Pricing system – Back end processing – Security a
Slide 15: Financial Results
FINANCIAL RESULTS TRANSURBAN FY16 RESULTS | 9 AUGUST 2016 15
Slide 16: Statutory Results
STATUTORY RESULTS FY16 ($M) FY15 ($M) KEY DRIVERS Toll revenue1 1,870 1,611 Toll revenue • $158 million increase from existing assets driven by traffic growth, toll price escalation EBITDA 1,248 782 and fee revenue • $101 million increase from Legacy Way, AirportlinkM7 and full year of 95 Express Ne
Slide 17: Proportional Results
PROPORTIONAL RESULTS FY16 FY15 ($M) % CHANGE KEY DRIVERS ($M) Toll revenue1 1,946 1,656 17.5% Toll revenue Other revenue2 60 70 (14.3%) • $209 million increase from existing assets • $81 million contribution from Legacy Way, AirportlinkM7 and full year of 95 Total revenue 2,006 1,726 16.2% Express L
Slide 18: EBITDA Movement
EBITDA MOVEMENT +14.8% +12.3% 1,480 33 1,447 8 150 1,289 FY15 EBITDA1 Existing Foreign FY16 existing Legacy Way, FY16 business exchange business AirportlinkM7 & EBITDA 1 growth EBITDA 95 Express 1. Excludes significant items. Lanes TRANSURBAN FY16 RESULTS | 9 AUGUST 2016 18
Slide 19: Network EBITDA Margins
NETWORK EBITDA MARGINS • FY16 EBITDA margin growth across Melbourne, PROPORTION OF TOTAL REVENUE EBITDA MARGINS1 Sydney and GWA FY14 FY15 FY16 • FY16 Group EBITDA margin impacted by higher GWA 19.5% 43.4% 49.5% proportion of lower margin businesses (GWA and Brisbane) contributing to overall business
Slide 20: Cost Movement
COST MOVEMENT • Cost increase to support growth in trips and business activity and the continued focus on technology and customer initiatives 526 +9.4% 48 478 8 14 10 437 9 FY15 total costs Operations Maintenance Strategic Foreign FY16 existing Legacy Way, FY16 total costs growth projects1 exchange
Slide 21: Free Cash Flow
FREE CASH FLOW • Movement in free cash influenced by: FREE CASH FLOW FY16 FY15 % CHANGE ‒ $81 million increase from 100% owned Free cash $926M $768M 20.6% Australian assets ‒ $26 million increase to free cash due to Weighted average securities 1,978M 1,910M 3.6% lower net finance costs paid (100% ow
Slide 22: Diversification of Funding Sources
DIVERSIFICATION OF FUNDING SOURCES FUNDING ACTIVITIES JUN 16 GROUP DEBT1 JUN 15 GROUP DEBT1 BANK DEBT • Diversified into new markets (USD 144A and CHF) AUD NOTES AUD PRIVATE PLACEMENT • Bank debt reduced to less than one third of drawn debt1 CAD NOTES • Major issuances during FY16: A$12,484M A$12,23
Slide 23: Market Update
MARKET UPDATE TRANSURBAN FY16 RESULTS | 9 AUGUST 2016 23
Slide 24: Sydney Network
SYDNEY NETWORK NORTHCONNEX OPERATIONAL ENHANCEMENT • Construction proceeding on time and on budget • Increase in recoveries following implementation of • Four road headers GLIDe currently in operation • Project cost is approximately $3.0 POTENTIAL FUTURE billion, including DEVELOPMENT Government’s •
Slide 25: Melbourne Network
MELBOURNE NETWORK WESTERN CITYLINK TULLA DISTRIBUTOR WIDENING • WD Reference Design • Major works commenced and RFT issued to market in mid-March 2016 • Works to commence on • Construction proceeding MFU in September 2016 on time and on budget • Total project cost • Total project cost is approximate
Slide 26: Brisbane Network
BRISBANE NETWORK AIRPORTLINKM7 GATEWAY UPGRADE • Financial close reached 1 NORTH April 2016 • TQ managing project in partnership with the • Customers migrated in Queensland Government June 2016 • Completion is expected in • Integration of AirportlinkM7 2018 into TQ has been completed LOGAN ENHANCEME
Slide 27: Greater Washington Area Network
GREATER WASHINGTON AREA NETWORK 66 EXPRESS LANES SOUTHERN EXTENSIONS • Competitive process TO 95 EXPRESS LANES underway to design, build, • An agreement has been finance, operate and maintain reached with VDOT to Express Lanes system on I- extend the 95 Express 66 Lanes by three kilometres. • Transu
Slide 28: Outlook
OUTLOOK Distribution Customer focused Multi-layered Next generation Network Road Usage Study guidance of 50.5 initiatives and approach to core of development management results to be cps, 11.0% growth investment to business, opportunities technology being released in year-on-year improve experience
Slide 29: Supplementary Information
SUPPLEMENTARY INFORMATION TRANSURBAN FY16 RESULTS | 9 AUGUST 2016 29
Slide 30: Supplementary Information
SUPPLEMENTARY INFORMATION CONTENTS 1 DETAILED FINANCIALS 2 TREASURY 3 CORPORATE OVERVIEW 4 DEVELOPMENT OPPORTUNITIES 5 GLOSSARY
Slide 31: Detailed Financials
DETAILED FINANCIALS SUPPLEMENTARY INFORMATION TRANSURBAN FY16 RESULTS | 9 AUGUST 2016 31
Slide 32: Statutory Results
STATUTORY RESULTS FY16 ($M) FY15 ($M) % CHANGE Toll revenue 1,870 1,611 16.1% Construction revenue 282 190 48.4% Other revenue 58 59 (1.7%) Total revenue 2,210 1,860 18.8% Employee benefit expense (149) (130) 14.6% Road operating costs (309) (243) 27.2% Construction costs (282) (185) 52.4% Transacti
Slide 33: Proportional Results
PROPORTIONAL RESULTS PROPORTIONAL EARNINGS FY16 ($M) FY15 ($M) % CHANGE Toll revenue 1,946 1,656 17.5% Other revenue 60 70 (14.3%) Total revenue 2,006 1,726 16.2% Total costs (526) (437) 20.4% EBITDA (excluding significant items) 1,480 1,289 14.8% Significant items (82) (272) (69.9%) EBITDA 1,398 1,
Slide 34: FY16 Proportional Result by Asset
FY16 PROPORTIONAL RESULT BY ASSET TOLL OTHER NET FINANCE INCOME TAX OWNERSHIP REVENUE REVENUE EBITDA D&A COST EXPENSE NPBT (EXP) / BENEFIT NPAT % ASSET $M $M $M $M $M $M $M $M 100.0% M2 255 3 213 (74) (49) 90 17 107 100.0% LCT 89 – 55 (23) (24) 8 3 11 100.0% CCT 60 – 39 (24) (14) 1 (1) – 75.1% ED 95
Slide 35: FY15 Proportional Result by Asset
FY15 PROPORTIONAL RESULT BY ASSET TOLL OTHER NET FINANCE INCOME TAX OWNERSHIP REVENUE REVENUE EBITDA D&A COST EXPENSE NPBT (EXP) / BENEFIT NPAT % ASSET $M $M $M $M $M $M $M $M 100.0% M2 227 4 191 (84) (41) 66 14 80 100.0% LCT 78 – 47 (19) (12) 16 (4) 12 100.0% CCT 57 – 31 (25) (12) (6) 1 (5) 75.1% E
Slide 36: Net Finance Costs
NET FINANCE COSTS STATUTORY NET FINANCE PROPORTIONAL NET COST EXPENSE FINANCE COST PAID CONTROLLED ASSETS FY16 ($M) FY15 ($M) FY16 ($M) FY15 ($M) CityLink (26) (27) (18) (22) M21 (50) (41) (33) (44) LCT2 (24) (12) (10) (12) CCT (13) (12) (11) (12) ED1 (42) (30) (24) (24) DRIVe – (1) – – 95 Express L
Slide 37: Maintenance Provision
MAINTENANCE PROVISION1 MAINTENANCE EXPENSE MAINTENANCE CASH SPEND RECOGNISED FY16 ($M) FY15 ($M) FY16 ($M) FY15 ($M) CityLink (17) (12) (15) (7) M2 (6) (5) (4) (4) LCT (9) (9) (8) (8) CCT (6) (6) (3) (1) ED (8) (11) (8) (22) M5 (4) (2) – (3) M7 (8) 1 (3) (4) Gateway Motorway (11) (9) (3) (1) Logan M
Slide 38: Free Cash Calculation
FREE CASH CALCULATION FREE CASH CALCULATION SOURCE OF INFORMATION/EXPLANATION Cash flows from operating activities Statutory Transurban Holdings Limited operating cash flow (includes cash inflow from M5 TNLs). (refer Group Statutory accounts) Add back transaction and integration costs Transaction an
Slide 39: Free Cash Flow
FREE CASH FLOW Reconciliation of statutory cash flow from operating activities to free cash FY16 FY15 ($M) ($M) Cash flows from operating activities 910 304 Add back transaction and integration costs related to 232 419 acquisitions (non-100% owned entities) Add back payments for maintenance of intan
Slide 40: Reconciliation of Free Cash
RECONCILIATION OF FREE CASH Reconciliation of proportional EBITDA to free cash FY16 Comments Proportional EBITDA excluding significant items 1,480 Refer to slide 33 for further detail Proportional net finance costs paid (cash) (487) Refer to slide 36 for further detail Add back proportional maintena
Slide 41: Treasury
TREASURY SUPPLEMENTARY INFORMATION TRANSURBAN FY16 RESULTS | 9 AUGUST 2016 41
Slide 42: Funding Structure at June 2016
FUNDING STRUCTURE AT 30 JUNE 2016 Transurban Bank Debt1 Capital Markets Debt1 Government Debt1 Non-Recourse Corporate Debt NSW QLD GWA Capital Markets Bank Debt Working M5 M2 CCT AMTN 495 Express Lanes 95 Express Lanes AMTN Capital2 A$0.7B A$0.8B A$0.3B A$0.5B A$0.3B A$1.0B USPP PABs PABs EMTN M7 LC
Slide 43: Group Debt at June 2016
GROUP DEBT AT 30 JUNE 2016 FACILITY FACILITY TOTAL FACILITY PROPORTIONAL STATUTORY DRAWN (US$M)1 (A$M)1 (A$M) DRAWN (A$M) (A$M) CORPORATE DEBT2 Working capital facilities3 - 950 950 62 62 Term bank debt - - - - - USPP 162 1,072 1,290 1,290 1,280 AMTN - 300 300 300 300 EMTN (CAD and Euro Notes) 305 2
Slide 44: Drawn Debt
DRAWN DEBT PROPORTIONAL BASIS FY16 FY15 MOVEMENT AUD1 ($M) ($M) ($M) EXPLANATION3 During the year A$129 million USPP, A$500 million AUD bonds and A$125 million term bank debt were Corporate 3,668 4,297 (629) repaid. A portion of the US 144A debt raised in November 2015 was swapped to AUD (A$70 milli
Slide 45: Key Debt Metrics
KEY DEBT METRICS FY16 FY15 TRANSURBAN NON TRANSURBAN NON- GROUP CORPORATE RECOURSE GROUP CORPORATE RECOURSE Weighted average maturity (years)1 8.7 yrs 5.8 yrs 10.2 yrs2 7.8 yrs 5.0 yrs 9.7 yrs3 Weighted average cost of AUD debt4 5.2% 5.7% 4.9% 5.3% 5.6% 5.1% Weighted average cost of USD debt4 4.3% 4
Slide 46: Extension of Debt Maturity Profile
EXTENSION OF DEBT MATURITY PROFILE JUNE 2015 MATURITY PROFILE 3,000 EXISTING DEBT 2,500 REFINANCED 2,000 DURING FY16 A$ MILLION 1,500 1,000 500 0 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 - 29 FY30 - 34 FY35+ JUNE 2016 MATURITY PROFILE 3,000 2,500 NEW DEBT RAISED DURING FY16 2,000 A$ MI
Slide 47: Corporate Debt Maturities
CORPORATE DEBT MATURITIES BY FINANCIAL YEAR – AS AT 30 JUNE 2016 2,000 Working Capital Facilities Term Bank Debt 1,800 USPP AMTN 1,600 EMTN 144A Letters of Credit 1,400 A$ MILLION 1,200 743 1,000 800 4 233 600 300 809 60 400 133 254 833 165 706 240 200 350 300 300 219 206 218 94 - FY17 FY18 FY19 FY0
Slide 48: Non-Recourse Debt Maturities
NON-RECOURSE DEBT MATURITIES BY FINANCIAL YEAR – AS AT 30 JUNE 2016 Transurban Queensland (incl AirportlinkM7) Eastern Distributor 1,800 Hills M2 Westlink M7 80 1,600 Cross City Tunnel M5 South Western Motorway 73 429 Lane Cove Tunnel 495 Express Lanes 1,400 525 95 Express Lanes 520 1,200 303 A$ MIL
Slide 49: Hedging Profile
HEDGING PROFILE1 • 99% hedged as at 30 June 16,000 2016 14,000 • Hedge tenor is matched to GWA Brisbane Sydney Corporate Fixed the tenor of debt on 98%2 of drawn debt 12,000 • Refinances are managed 10,000 early A$ MILLION 8,000 6,000 4,000 2,000 - FY16 FY18 FY20 FY22 FY24 FY26 FY28 FY30 FY32 FY34 F
Slide 50: Corporate Overview
CORPORATE OVERVIEW SUPPLEMENTARY INFORMATION TRANSURBAN FY16 RESULTS | 9 AUGUST 2016 50
Slide 51: Summarised Group Structure
SUMMARISED GROUP STRUCTURE TRANSURBAN HOLDINGS LIMITED TRANSURBAN HOLDING TRUST TRANSURBAN INTERNATIONAL LIMITED CORPORATE ENTITIES ROAD/OPERATING ENTITIES OTHER ENTITIES ROAD/OPERATING CORPORATE ENTITIES ENTITIES Including: Companies operating and maintaining roads Trusts holding asset and financin
Slide 52: Asset Portfolio
ASSET PORTFOLIO SUMMARY STATISTICS AS AT 30 JUNE 2016 MELBOURNE SYDNEY OVERVIEW CITYLINK M5 M2 ED M7 NORTHCONNEX LCT CCT Opening date Dec 2000 Aug 1992 May 1997 Dec 1999 Dec 2005 Under Construction Mar 2007 Aug 2005 Remaining concession period 19 years 10 years 32 years 32 years 32 years 28 years1 3
Slide 53: Asset Portfolio
ASSET PORTFOLIO SUMMARY STATISTICS AS AT 30 JUNE 2016 BRISBANE GREATER WASHINGTON AREA GATEWAY LOGAN GO BETWEEN LEGACY 495 EXPRESS 95 EXPRESS OVERVIEW CLEM7 AIRPORTLINKM7 MOTORWAY MOTORWAY BRIDGE WAY LANES2 LANES2 Opening date Dec 1986 Dec 1988 Mar 2010 Jul 2010 Jun 2015 Jul 2012 Nov 2012 Dec 2014 R
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 GREATER WASHINGTON AREA AUSTRALIA TRANSACTION Tolling arrangement in place Tolling arrangement in place No tolling arrangement in place 1st toll notice Reminder notice Further customer communication1 INFRINGEMENT PROCESS e.g. SMS, outbound calls, email
Slide 56: Safety Highlights
SAFETY HIGHLIGHTS HIGHLIGHTS TRANSURBAN RICI1 • Continued focus on RICI1 with a 17% reduction on pcp 10 • Zero Lost Time Injuries for employees • Two recordable incidents for employees • More than 1.5 million construction hours on NorthConnex and more than 850,000 hours on CTW and one Lost Time Inju
Slide 57: Development Opportunities
DEVELOPMENT OPPORTUNITIES SUPPLEMENTARY INFORMATION TRANSURBAN FY16 RESULTS | 9 AUGUST 2016 57
Slide 58: Western Distributor
WESTERN DISTRIBUTOR OVERVIEW • The Reference Design for the Western Distributor and the West Gate Freeway widening and RFT have been provided to three shortlisted construction consortiums • Project scope includes: – Western Distributor and West Gate Freeway widening – Webb Dock Access improvements –
Slide 59: Inner City Bypass
INNER CITY BYPASS OVERVIEW • Brisbane City Council has entered discussions with TQ to partner on the delivery of the ICB upgrade • Project cost expected to be $80 million1 • The upgrade will widen the ICB to four lanes in each direction between Legacy Way and the RNA tunnel • Completion expected in
Slide 60: Logan Enhancement Project
LOGAN ENHANCEMENT PROJECT OVERVIEW • TQ is currently developing the final business case and undertaking community and stakeholder engagement. • The project includes: – Interchange upgrades – Widening parts of the Gateway Extension Motorway – Construction of new south-facing ramps at Compton Road • F
Slide 61: 395 Express Lanes
395 EXPRESS LANES OVERVIEW • Transurban and VDOT are in exclusive negotiations on a development framework to progress the 395 Express Lanes, a 13 kilometre extension to the 95 Express Lanes • The project will increase capacity by converting 2 HOV lanes to 3 Express Lanes • Procurement process underw
Slide 62: 95 Express Lanes Southern Extensions
95 EXPRESS LANES SOUTHERN EXTENSIONS 95 EXPRESS LANES SOUTHERN EXTENSION • An agreement has been reached with VDOT to extend the 95 Express Lanes by three kilometres. • VDOT to assume all delivery and cost risk • Construction commenced in July 2016 and is expected to be open to traffic late 2017 • T
Slide 63: 66 Express Lanes
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 another consortia, in the competitive process with its partner Skanska • Proposals due October 2016 • Preferred bidde
Slide 64: Glossary
GLOSSARY SUPPLEMENTARY INFORMATION TRANSURBAN FY16 RESULTS | 9 AUGUST 2016 64
Slide 65: Glossary
GLOSSARY TERM DEFINITION ACCC Australian Competition and Consumer Commission 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 ATTENDANCE MODEL Incident res
Slide 66: Glossary
GLOSSARY TERM DEFINITION FFO Funds From Operations FTSE Financial Times Stock Exchange 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 subsidiar
Slide 67: Glossary
GLOSSARY TERM DEFINITION MWH Megawatt Hour NCX NorthConnex N.M. Not Meaningful NOK Norwegian Krone NPAT and NPBT Net Profit After Tax and Net Profit Before Tax NWRG NorthWestern Roads Group O&M Operations and Maintenance OTHER REVENUE Other revenue includes interoperability charges, development and
Slide 68: Glossary
GLOSSARY TERM DEFINITION SAFE CLEARANCE MODEL Incident response focused on the rapid arrival and clearance of incidents to quickly and safely reopen all lanes of the road. SIGNIFICANT ITEMS Significant items include stamp duty, integration costs and transaction costs. SERVICE AND FEE REVENUE Service