Transurban Group Ltd. · ASX:TCL
Transurban — Investor Day (April 2018)
62 slides from Transurban's investor day presentation, Apr 30, 2018
Slide 1: Transurban Investor Day Presentation (ASX release)
asx release 30 April 2018 For personal use only TRANSURBAN INVESTOR DAY PRESENTATION Please find attached the investor presentation that will be provided at the Transurban Investor Day today. The presentation will be webcast live from 9:30 am AEST on the Transurban website www.transurban.com/investo
Slide 2: Investor Day 2018
For personal use only Investor Day 2018 30 April 2018
Slide 3: For personal use only
For personal use only 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 Transurban I
Slide 4: Scott Charlton, Transurban
For personal use only Scott Charlton Transurban INVESTOR DAY 2018
Slide 5: For personal use only
For personal use only Image courtesy of Volvo Car Australia. INVESTOR DAY 2018 4
Slide 6: Current and future state of WGTP
For personal use only Install via Apple app store Current state of WGTP Future state of WGTP INVESTOR DAY 2018 5
Slide 7: For personal use only
For personal use only • Transurban • Listening to Scott Charlton stakeholders Henry Byrne • Capital strategy Adam Watson • Next phase for Queensland • CEO and CFO panel Q&A Sue Johnson MORNING BREAK • North America Jennifer Aument • Development Vin Vassallo • ExCo panel Q&A • People and culture • We
Slide 8: Executive team
For personal use only Scott Charlton Adam Watson Sue Johnson Jennifer Aument CEO CFO1 Group Executive, President, North Queensland America Vin Vassallo Tony Adams Andrew Head Michele Huey Group Executive, Group Executive, Group Executive, New Group Executive, Development Project Delivery South Wales
Slide 9: Core capabilities
For personal use only Network planning Community Development & forecasting engagement & delivery Customer Technology Operations experience INVESTOR DAY 2018 8
Slide 10: Development
For personal use only Development Significant growth achieved since FY08 Consistently growing distributions $11.4 billion of new developments and asset FY FY FY FY FY FY FY FY FY FY FY ASSET enhancements 08 09 10 11 12 13 14 15 16 17 18 BASE $7.7 billion of acquisitions Ability to continue
Slide 11: Population growth and congestion
30-year population growth forecasts across our five markets1 Congestion in major cities2 For personal use only 50% 10 28% 9 40% 48% 59% Population (millions) Congestion 8 30% 7 6 36% 20% 5 67% 10% 4 3 0% 2 1 0 Sydney Melbourne Brisbane GWA Montreal 1. Forecast population growth for Australia between
Slide 12: Sustainable transport policy
For personal use only Increasing debate around major infrastructure projects Leading and supporting sustainable transport policy is essential to remain a partner of choice—Transurban’s strategy and capability assists government partners in navigating project-specific issues Transurban will wor
Slide 13: Long-term infrastructure planning
For personal use only Majority of existing toll roads were delivered by governments from both major parties, acting on long-term master plans – Melbourne’s first long-term transportation plan released by the Bolte Government in 1969 – The 1990s saw the establishment of Sydney’s orbital road networ
Slide 14: West Gate Tunnel Project background
2007 “It is vital to the future economic prosperity For personal use only Melbourne population to increase by almost 60%1 over 30 years, with western and northern of Victoria that we fully assess the options for personal, business, freight and public suburbs seeing majority of growth transport tra
Slide 15: For personal use only
For personal use only INVESTOR DAY 2018 14
Slide 16: West Gate Tunnel construction progress
For personal use only Components of one of two tunnel boring machines under construction Over 900,000 work hours already invested Actual spend to date of over $700 million West Gate Tunnel Project TBM personnel Approximately 1,200 people employed lock and cutter head being Third major worksi
Slide 17: Adam Watson: Capital strategy
For personal use only Adam Watson Capital strategy INVESTOR DAY 2018
Slide 18: Investment in capabilities
For personal use only Investment in multi-disciplinary Supporting and developing team with industry-leading tolling systems, customer Network planning expertise Technology experience platforms, & forecasting operational security and Program to enhance strategic network models corporate systems
Slide 19: Margin expansion and value creation
For personal use only Generation of operational Future value Overall efficiencies and creation sustainability of margin the organisation expansion INVESTOR DAY 2018 18
Slide 20: Capital strategy objective
For personal use only Objective Balancing distribution growth with long-term value creation Balanced approach Projects and to debt/equity acquisitions funding mix while structured to maintaining strong achieve investment grade objective credit metrics INVESTOR DAY 2018 19
Slide 21: Project and acquisition funding structures
For personal use only Credit metrics naturally improve as an asset matures─through growing cash flows Consortium partnerships support capital requirements Revenue levers help to manage distributions NorthConnex Transurban Queensland Capital releases provide a method of Total project cost: $2
Slide 22: Debt composition and refinancing
For personal use only Minimal refinancing required until FY20 Current cost of debt well below upcoming refinancings Refinancing interest at rates lower than the maturing debt 8% Current treasury position: 7% – Interest and currency hedging in place for term of facilities─ approx. 98% interest
Slide 23: Inflation-linked pricing
For personal use only Inflation-linked pricing escalators embedded in concession Australian CPI historically correlated to bond yields agreements Rising inflation environment likely to stimulate positive revenue 5% outcome 4% – Increased employment drives additional traffic growth 3% – Increased
Slide 24: Vin Vassallo: Development
For personal use only Vin Vassallo Development INVESTOR DAY 2018
Slide 25: Centralised development group
For personal use only Size of business requires centralised development group to leverage core capabilities across regions Development and operational environment constantly evolving, requiring innovative ways to deliver whole of network outcomes Network planning Community Development & forecast
Slide 26: Development opportunities by region
For personal use only Brisbane Canada M1 Pacific Motorway Upgrade Greater Montreal Centenary/Western Motorway Opportunities where criteria widening aligns with Transurban strategy Bruce Highway Upgrade including: – Toronto – Vancouver Sydney WestConnex ($16.8 billion) Western Harbour T
Slide 27: Partnership and service opportunities
For personal use only Opportunities for partnerships to strategically leverage Transurban core capabilities in non-traditional service arrangements. Recent examples include: – Provision of tolling services to Toowoomba Second Range Crossing – Oversight of D&C delivery of Gateway Upgrade North in B
Slide 28: Development approach
For personal use only Centralised development group enables: – Good governance – Better coordination between regional development teams and core functions – Strategic allocation of resources and project prioritisation – Application of lessons learnt Refine approach to traditional development opp
Slide 29: Core capabilities and efficiencies
For personal use only Significant opportunity Core capabilities to drive Integration expertise for still exists to make efficiencies on and off new assets assets more efficient Transurban roads: – Customer interfaces through consideration of – Traffic modelling and broader road network – Tolli
Slide 30: Suzette Corr: People and culture
For personal use only Suzette Corr People and culture INVESTOR DAY 2018
Slide 31: Workforce by capability
For personal use only Team of dedicated transport network planners and traffic Represents over 35%1 of our Network planning modelling experts workforce Technology & forecasting Team of 401 representing one of Segment workforce increased the largest traffic modelling teams five-fold2 since FY
Slide 32: Workforce planning and growth
For personal use only Appropriately resourced for our current business and pipeline projects Workforce segment growth1 Aware of shifting workforce trends and the key skills required – Digital disruption─data analytics and technology skills 1,000 FY13 Current – Shifts in access to people needed t
Slide 33: Engagement and diversity
For personal use only Employee engagement demonstrated through our Opinion Men Women 70% and Pulse surveys 62% 53% – Employee engagement at 73%1 47% 50% 50% – Leadership effectiveness at 83%1 38% 30% – 80%1 recommend Transurban as a great place to work Gender diversity promoted through programs
Slide 34: People practices and recognition
For personal use only Our people practices are in place to deliver on our strategy and we continue to receive external recognition Workplace Gender Equality Agency (WGEA) “Employer of Choice for Gender Equality” citation for four years in a row Equileap listed top 20 global company for gender eq
Slide 35: Henry Byrne: Trust and reputation
For personal use only Henry Byrne Trust and reputation INVESTOR DAY 2018
Slide 36: Stakeholder groups and objectives
For personal use only Business partners Employees Objectives & suppliers Greater understanding of how we are perceived and mapping of stakeholder issues Government Business-led response & industry Customers to address areas for improvement Balanced view of stakeholder interests Community Inves
Slide 37: Social licence model
For personal use only Our approach uses an adapted CSIRO model Context factors Distributional fairness The flow of benefits and negative impacts within the community Procedural fairness Key stakeholder issues of Social licence All stakeholders are considered Trust interest and/or concern in decision
Slide 38: Stakeholder research findings
For personal use only A project was developed to listen to Transurban’s stakeholders to better understand the issues of interest or concern that could impact social licence to operate AccountAbility’s AA1000 Standard principles were applied in developing and conducting research Perceived as best
Slide 39: Transparency and value initiatives
For personal use only Transurban has introduced a range of practical responses, including initiatives to enhance or complement existing programs Current responses categorised by two themes: Transparency Value Examples of our initiatives Information Toll road Hardship Social signage comparator as
Slide 40: Toll road comparison tool
For personal use only A practical tool to compare travel on alternative routes using real-time data Provides additional measures of value including fuel consumption and carbon emission savings Tool will continue to evolve based on learnings from pilot The comparison tool can be found here: h
Slide 41: Travel time information for customers
For personal use only Providing customers with more information to determine whether they travel on Transurban’s roads Visibility of the tolled and alternative roads travel time Using independent/third party travel time data Exploring potential pilot sites with our government partners INVEST
Slide 42: Sue Johnson: Queensland
For personal use only Sue Johnson Queensland INVESTOR DAY 2018
Slide 43: Queensland opportunities
For personal use only Urban sprawl Implement Leveraging Continue and population additional experience to building on growth across operational drive future existing South East efficiencies performance for relationships Queensland, (for example Brisbane with partners providing new control room opport
Slide 44: Transurban Queensland EBITDA and margin
For personal use only EBITDA margins continuing to increase Insourcing operations 16% EBITDA growth1 - LW on-boarded Development projects Further EBITDA increases expected from: 450 - LEP and ICB 72% – Development projects coming online TQ LW (LEP and ICB) ALM7 71% 400 acquisition June 2014 open
Slide 45: Queensland network growth
For personal use only Transurban Queensland’s equity partners continue to be supportive of growth Continued opportunities for growth through development projects and service offerings Pre-acquisition Today Gateway CLEM7 Legacy Way Integration Gateway Logan GBB Logan Acquisition AirportlinkM7 CLE
Slide 46: South East Queensland opportunities
For personal use only Current success creating further opportunities in South East Queensland Population growth in South East Queensland will add almost two million people by 2041 and approximately one million in the greater Brisbane region Government has a strong focus on technology and infrast
Slide 47: Customer experience initiatives
For personal use only Initiatives underway to improve customer experience and reduce fees Successful implementation of GLIDe in Queensland Actively supported changes in legislation with government for improved fee structure and proactive recovery processes Enhanced customer communication—reduc
Slide 48: Jennifer Aument: North America
For personal use only Jennifer Aument North America INVESTOR DAY 2018
Slide 49: Network potential in congested North American cities
For personal use only Network potential in North America’s most congested cities¹ 50% Supportive Government Los Angeles Demographics experience 40% Vancouver San Francisco in PPP Miami Seattle Toronto Congestion Level 30% Montreal Austin Boston GWA (Washington D.C., 20% Virginia, Maryland) Houston D
Slide 50: For personal use only
For personal use only INVESTOR DAY 2018 49
Slide 51: A25 catchment area
For personal use only A25 catchment area has above average population and Average annual daily traffic on main roads in the employment growth metropolitan area Northern Arc Northern Arc Laval A25 Concession Island Laval Island A25 Concession Montreal Island South AADT Shore <5,000 Montreal >5,000 Is
Slide 52: Montreal population and employment
For personal use only Population and population density¹ Montreal unemployment rate² Population Density (/km²) 10 7,000 1,200 Montreal, unemployment rate Population ('000s) 6,000 1,000 9 5,000 800 8 4,000 (percent) 600 7 3,000 400 2,000 6 1,000 200 5 0 0 Brisbane Melbourne Sydney GWA Montreal 4 Popu
Slide 53: A25 acquisition overview
For personal use only 7.2km toll road and bridge connecting Northern Montreal across the Rivière des Prairies to commercial and residential areas Free flow, electronic tolling Concession agreement with the Ministère des Transports, de la Mobilité durable et de l'Électrification—opened in May 2
Slide 54: Quebec political context
For personal use only Quebec provincial election in October 2018 Three major political parties have made transportation a priority in the pre-election debate Congestion relief and mobility improvements among the top issues for Montreal’s 800,000 North Shore residents and elected officials Co
Slide 55: A25 opportunity summary
For personal use only Strong traffic and revenue growth over the past three years with 4% growth in total trips in 2017 Significant congestion throughout Montreal road network Opportunity to realise operational synergies by leveraging core business capabilities Development potential with sup
Slide 56: Wrap-up
For personal use only Wrap-up INVESTOR DAY 2018
Slide 57: Investment proposition
For personal use only Investment proposition supported by Balancing distribution growth and long term value creation capital strategy To be partner of choice with governments providing effective and Capabilities critical to delivering innovative urban road infrastructure and services utilising core
Slide 58: Analyst data pack
For personal use only Analyst data pack INVESTOR DAY 2018
Slide 59: Toll escalation
Toll escalation Toll rates increase with inflation annually on June 1st and when traffic For personal use only 1. Tolls are categorised based on vehicle height: level thresholds are met at the beginning of each month a) Category 1—vehicles below 2.30m; and Toll escalation thresholds assessed monthly
Slide 60: A25 revenue, traffic and EBITDA margin
For personal use only Availability payments Average annual daily traffic ‘000s¹ Paid monthly, pro rated to CAD 13.4 million per year. Maximum annual availability 47 payment is fixed and not indexed to inflation 46 Toll income 45 Toll income includes tolls, administrative fees and government reim
Slide 61: Glossary
For personal use only Glossary INVESTOR DAY 2018
Slide 62: Glossary
For personal use only 1H/2H First or second half of the financial year FredEx Fredericksburg Extension Project O&M Operations and maintenance A25 Toll road and bridge in Montreal FFO Funds from operations PPP Public private partnership ADT Average daily traffic FY Financial year PAB Private activity