Transurban Group Ltd. · ASX:TCL
Transurban — H1 2019 Earnings Presentation
67 slides from Transurban's earnings presentation, Feb 12, 2019
Slide 1: Transurban 1H19 Results
TRANSURBAN 1H19 RESULTS
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: Contents
CONTENTS 04 HIGHLIGHTS 10 MARKET UPDATES 22 FINANCIAL RESULTS 29 OUTLOOK 31 SUPPLEMENTARY INFORMATION TRANSURBAN 1H19 RESULTS | 12 FEBRUARY 2019 3
Slide 4: 1H19 Highlights
1H19 HIGHLIGHTS 376K HRS 2.7% 9.8% average workday average daily EBITDA growth to $1,001 million2 travel-time savings1 traffic growth reduced by approx. $10 million primarily from fee reductions and process improvements3 PERFORMANCE 2.7% 4.0% 5.4% underlying cost growth4, average interest rate proje
Slide 5: 1H19 Highlights
1H19 HIGHLIGHTS WESTCONNEX NORTHCONNEX A25 acquisition and financial tunnelling complete with paving integration substantially complete close achieved with and M&E works underway with traffic exceeding expectations integration progressing as and financial performance above OPERATIONS, forecast inves
Slide 6: 1H19 Highlights
1H19 HIGHLIGHTS CUSTOMER LINKT GROWING SATISFACTION ASSIST LINKT increased with travel-time savings team established to help by offering benefits to new and approximately $10 million customers in hardship customers through Roam saved by customers during 1H19 acquisition2 CUSTOMER AND primarily from
Slide 7: Creating Long-Term Value
CREATING LONG-TERM VALUE CUSTOMER VALUE INDUSTRY VALUE • faster and more reliable travel times • more than a billion dollars in supply chain spend (annually) • safer roads, 24/7 incident response • support for supply-chain partners to create greater social, • increased transport options safety and s
Slide 8: Priorities
PRIORITIES ENHANCE DELIVER MAXIMISE CUSTOMER AND COMMITTED PERFORMANCE OF COMMUNITY PROJECTS OPERATIONS OFFERINGS TRANSURBAN 1H19 RESULTS | 12 FEBRUARY 2019 8
Slide 9: Progressive Cash Flow from Nine Projects in Next Five Years
PROGRESSIVE CASH FLOW FROM NINE PROJECTS IN NEXT FIVE YEARS 495 Express Lanes Northern Extension1 Concession expires 2087 • Nine projects due to M4-M5 Link (WCX Stage 3A) Concession expires 2060 complete in next five Expected project completion2 years, contributing to Fredericksburg Extension Conces
Slide 10: Market Updates
MARKET UPDATES NorthConnex tunnel
Slide 11: Sydney
SYDNEY TOLL REVENUE GROWTH 7.7% EBITDA GROWTH 8.2% ADT GROWTH 2.1%2 1H19 performance Operations, delivery and development Customer and • Toll revenue growth of 7.7% includes • NorthConnex tunnelling complete, opening community additional ownership stake in M5 West1 scheduled for 2020 • Launched Trip
Slide 12: WestConnex
WESTCONNEX Delivery and operations Integration • New M4 tunnels scheduled to open in Program progressing on track with key milestones achieved: Q4 FY19 • Established WestConnex Board, governance framework • New M5 excavation complete and leadership team • M4-M5 Link excavation works • No material is
Slide 13: Sydney
SYDNEY $6.9 billion of capital invested or committed in Sydney in the last five years1 1. Capital invested/committed represents Transurban’s proportional share of projects completed/under construction and maintenance spend. TRANSURBAN 1H19 RESULTS | 12 FEBRUARY 2019 13
Slide 14: Melbourne
MELBOURNE TOLL REVENUE ADT GROWTH 5.6% EBITDA GROWTH 5.4% GROWTH 4.6% 1H19 performance Operations, delivery and development Customer and • Toll revenue growth of 5.6% driven by • First of two WGTP tunnel boring machines arrived in community ADT growth of 4.6% Melbourne, tunnelling set to begin mid-2
Slide 15: Melbourne
MELBOURNE $5.1 billion of capital invested or committed in Melbourne in the last five years1 1. Capital invested/committed represents Transurban’s proportional share of projects completed/under construction and maintenance spend. TRANSURBAN 1H19 RESULTS | 12 FEBRUARY 2019 15
Slide 16: Brisbane
BRISBANE TOLL REVENUE GROWTH 1.7% EBITDA GROWTH 2.4% ADT GROWTH 0.3% 1H19 performance Operations, delivery Customer and • ADT growth of 0.3% impacted by and development community disruption from GUN and LEP projects • All motorway lanes opened • Improved fee arrangements • ADT growth of 4.1% excludi
Slide 17: Brisbane
BRISBANE $5.8 billion of capital invested or committed in Brisbane in the last five years1 1. Capital invested/committed represents Transurban’s proportional share of projects completed/under construction and maintenance spend. TRANSURBAN 1H19 RESULTS | 12 FEBRUARY 2019 17
Slide 18: North America
NORTH AMERICA1 TOLL REVENUE GROWTH 42.9% EBITDA GROWTH 53.1% ADT GROWTH 1.4%2 1H19 performance Greater Washington Area Montreal • Toll revenue growth of 12.6% in the • 395 Express Lanes project over 50% complete, • Integration substantially Greater Washington Area expected to open in FY20 complete w
Slide 19: North America – Greater Washington Area
NORTH AMERICA – GREATER WASHINGTON AREA $2.9 billion of capital invested or committed in North America in the last five years1 1. Capital invested/committed represents Transurban’s proportional share of projects completed/under construction and maintenance spend. TRANSURBAN 1H19 RESULTS | 12 FEBRUAR
Slide 20: North America – Montreal
NORTH AMERICA – MONTREAL $2.9 billion of capital invested or committed in North America in the last five years1 1. Capital invested/committed represents Transurban’s proportional share of projects completed/under construction and maintenance spend. TRANSURBAN 1H19 RESULTS | 12 FEBRUARY 2019 20
Slide 21: Portfolio Opportunities
PORTFOLIO OPPORTUNITIES Development Additional opportunities – development existing networks opportunities • Government-owned • Maryland DOT WestConnex stake advancing express (49%) lanes program Montreal • M7 widening • Engagement in Brisbane Montreal with new • Gateway Motorway widening Quebec gov
Slide 22: Financial Results
FINANCIAL RESULTS CityLink Bolte Bridge
Slide 23: Statutory Results
STATUTORY RESULTS 1H18 ($M) 1H19 ($M) • $52 million increase from existing assets driven by traffic growth across the Australian and North American Toll revenue 1,131 1,298 networks • $115 million contribution from A25 (acquired 5 June 2018) and consolidation of M5 West from 18 September 2018 • $47
Slide 24: Proportional Results
PROPORTIONAL RESULTS 1H18 ($M) 1H19 ($M) % CHANGE • $54 million increase driven by traffic growth and toll price escalation across existing assets, inclusive of impact from reduced fees and improved processes for customers of Toll revenue1 1,176 1,286 9.3% approximately $10 million • New investments
Slide 25: EBITDA Margins
EBITDA MARGINS1 1H18 FY18 1H19 • Margin growth across Sydney, Brisbane and North America Sydney2 81.2% 81.1% 81.6% • Melbourne and Brisbane margins impacted by reduction in fees due to customer initiatives Melbourne 88.5% 88.2% 88.3% • Group EBITDA margin impacted by lower fee revenue and investment
Slide 26: Cost Movement
COST MOVEMENT +10.5% +2.7% 323 • Underlying 1H19 +1.5% cost growth of 1.5% excluding foreign 17 exchange • Non-cash 6 maintenance 300 2 297 3 adjustment of $6 (3) 5 million largely due to 293 localisation of discount rate in North America 1H18 total Operations Maintenance Strategic Adjusted Foreign
Slide 27: Free Cash Flow Movement
FREE CASH FLOW MOVEMENT 775 +22.9% +14.8% 715 668 98 9 8 7 22 30 21 617 70 582 1H18 free EBITDA Distributions Net finance Maintenance Working 1H19 M5 dividend PABs 1H19 free NWRG capital 1H19 free 1H19 cash flow 100% non-100% costs 100% capital underlying timing premium cash flow release cash flow d
Slide 28: Treasury Summary
TREASURY SUMMARY Balance sheet well positioned 1H19 TOTAL DEBT ISSUANCES (TOTAL $8.0 BILLION) • $4.8 billion of equity raised in September 2018 via entitlement offer and placement to Sydney Transport Partners fund WestConnex acquisition Cardinal (A25) CAD Notes • Credit metrics including FFO/Debt re
Slide 29: Outlook
OUTLOOK 495 Express Lanes interchange
Slide 30: Outlook
OUTLOOK Development / Operations delivery • FY19 distribution guidance reaffirmed at 59.0 cps • Mid-single digit distribution percentage growth in FY20 reaffirmed • Five projects completed by FY21 Customer and a further four by FY24 supporting Community experience ongoing distribution growth engagem
Slide 31: Supplementary Information
SUPPLEMENTARY INFORMATION 1 DETAILED FINANCIALS 2 TREASURY 3 CORPORATE OVERVIEW 4 GLOSSARY Clem7 tunnel
Slide 32: Detailed Financials
DETAILED FINANCIALS CityLink
Slide 33: Traffic and Revenue Performance
TRAFFIC AND REVENUE PERFORMANCE DEC 18 QUARTER1 1H191 PROPORTIONAL PROPORTIONAL TOLL REVENUE ADT TOLL REVENUE ADT % CHANGE % CHANGE % CHANGE % CHANGE Sydney2 12.4% 1.8% 7.7% 2.1% Melbourne 4.8% 3.7% 5.6% 4.6% Brisbane 2.5% 0.0% 1.7% 0.3% North America3 45.9% 1.0% 42.9% 1.4% 1. Compared to prior corr
Slide 34: Traffic and Revenue Data
TRAFFIC AND REVENUE DATA1 DEC 17 DEC 18 ASSET QUARTER QUARTER % CHANGE 1H18 1H19 % CHANGE Sydney M2 Total Toll Revenue ($M) $76 $79 4.5% $152 $157 4.0% Average Daily Trips (‘000) 133 138 3.0% 133 137 3.4% LCT Total Toll Revenue ($M) $25 $26 4.7% $50 $52 3.5% Average Daily Trips (‘000) 92 95 3.2% 92
Slide 35: Traffic and Revenue Data
TRAFFIC AND REVENUE DATA1 DEC 17 DEC 18 ASSET QUARTER QUARTER % CHANGE 1H18 1H19 % CHANGE Brisbane Gateway Motorway Total Toll Revenue ($M) $55 $56 2.4% $112 $113 1.4% Average Daily Trips (‘000) 117 117 0.2% 118 118 0.4% Logan Motorway Total Toll Revenue ($M) $47 $46 (2.1%) $95 $94 (1.5%) Average Da
Slide 36: Proportional Toll Revenue by Asset
PROPORTIONAL TOLL REVENUE BY ASSET DEC 18 QUARTER ($M) 1H19 ($M) OWNERSHIP 100% PROPORTIONAL 100% PROPORTIONAL M2 100% $79 $79 $157 $157 LCT 100% $26 $26 $52 $52 CCT 100% $18 $18 $34 $34 ED 75.1% $38 $29 $76 $57 M5 West1 65.38% $76 $46 $152 $85 M7 50% $110 $55 $223 $112 M42 25.5% $54 $14 $54 $14 Cit
Slide 37: Statutory Results
STATUTORY RESULTS 1H18 ($M) 1H19 ($M) % CHANGE Toll revenue 1,131 1,298 14.7% Construction revenue 462 777 68.0% Other revenue 31 39 25.7% Total revenue 1,624 2,114 30.2% Employee benefit expense (92) (108) 17.4% Road operating costs (163) (184) 13.0% Construction costs (462) (777) 68.0% Transaction
Slide 38: Proportional Results
PROPORTIONAL RESULTS PROPORTIONAL EARNINGS 1H18 ($M) 1H19 ($M) % CHANGE Toll revenue 1,176 1,286 9.3% Other revenue 28 38 38.1% Total revenue 1,204 1,324 10.0% Total costs (293) (323) 10.5% EBITDA excluding significant items 911 1,001 9.8% EBITDA 911 693 (24.0%) RECONCILIATION OF STATUTORY EBITDA TO
Slide 39: 1H19 Proportional Result by Asset
1H19 PROPORTIONAL RESULT BY ASSET TOLL OTHER NET FINANCE INCOME TAX REVENUE REVENUE EBITDA D&A COST EXPENSE NPBT (EXP)/BENEFIT NPAT OWNERSHIP ASSET $M $M $M $M $M $M $M $M 100% M2 157 1 131 (37) (19) 75 5 80 100% LCT 52 1 35 (11) (14) 10 (3) 7 100% CCT 34 - 23 (12) (5) 6 (1) 5 75.1% ED 57 - 44 (19)
Slide 40: 1H18 Proportional Result by Asset
1H18 PROPORTIONAL RESULT BY ASSET TOLL OTHER NET FINANCE INCOME TAX REVENUE REVENUE EBITDA D&A COST EXPENSE NPBT (EXP)/BENEFIT NPAT OWNERSHIP ASSET $M $M $M $M $M $M $M $M 100% M2 152 1 129 (37) (19) 73 4 77 100% LCT 50 - 33 (11) (15) 7 (2) 5 100% CCT 34 - 22 (12) (5) 5 (1) 4 75.1% ED 56 - 41 (19) (
Slide 41: 1H19 Net Finance Costs Paid
1H19 NET FINANCE COSTS PAID NON-CASH ITEMS CONCESSION PAYMENTS & NET PROPORTIONAL STATUTORY DEBT MAINTENANCE INTEREST INTEREST INTEREST NET INTEREST NET INTEREST FEES PROVISION CAPITALISATION OTHER1 ACCRUALS2 PAID PAID CONTROLLED ENTITIES OWNERSHIP $M $M UNWIND $M $M $M $M $M CityLink 100% (21) - 3
Slide 42: 1H18 Net Finance Costs Paid
1H18 NET FINANCE COSTS PAID NON-CASH ITEMS CONCESSION PAYMENTS & MAINTENANCE STATUTORY DEBT PROVISION INTEREST INTEREST NET PROPORTIONAL CONTROLLED ENTITIES OWNERSHIP NET INTEREST FEES UNWIND CAPITALISATION ACCRUALS1 INTEREST PAID NET INTEREST PAID CityLink 100% (10) (3) 3 - - (10) (10) M2 100% (19)
Slide 43: Maintenance Provision
MAINTENANCE PROVISION1 MAINTENANCE MAINTENANCE 2 EXPENSE RECOGNISED CASH SPEND 1H18 ($M) 1H19 ($M) 1H18 ($M) 1H19 ($M) CityLink (3) (4) (6) (7) M2 (3) (3) (1) (3) LCT (3) (2) (2) (2) CCT (3) (3) (3) (3) ED (4) (3) (2) (5) M7 (5) (7) (6) (4) M5 West (2) (3) (2) (2) M4 - - - - Gateway Motorway (5) (4)
Slide 44: Free Cash Calculation
FREE CASH CALCULATION FREE CASH CALCULATION SOURCE OF INFORMATION/EXPLANATION Cash flows from operating activities Statutory Transurban Holdings Limited operating cash flow. (refer Group Statutory accounts) Add back transaction and integration costs related to Transaction and integration related cas
Slide 45: Free Cash Flow
FREE CASH FLOW Reconciliation of statutory cash flow from operating activities to free cash 1H18 ($M) 1H19 ($M) FREE CASH FLOW 1H18 1H19 % CHANGE Cash flows from operating activities 486 552 Free cash $582M $715M 22.9% Add back transaction and integration costs related to - 17 Weighted average secur
Slide 46: Reconciliation of Proportional EBITDA to Free Cash
RECONCILIATION OF PROPORTIONAL EBITDA TO FREE CASH 1H19 ($M) Comments Proportional EBITDA 693 Refer to slide 38 for further detail Significant items 308 Include stamp duty on acquisitions and transaction and integration costs relating to acquisitions Proportional net finance (377) Refer to slides 41
Slide 47: Development Pipeline
DEVELOPMENT PIPELINE 1H191 2H19 FY20 FY21 FY22 FY23 COMMITTED PROJECTS/ PROJECTS UNDER $80M LOGAN ENHANCEMENT PROJECT Brisbane ($320 million) CONSTRUCTION2 USD70M 395 EXPRESS LANES GWA (USD475 million) $60M NORTHCONNEX Sydney ($1.3 billion) NEW M4 TUNNELS (WCX STAGE 1B) Sydney $0.9 $120M NEW M5 (WCX
Slide 48: Treasury
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Slide 49: Funding Structure at 31 December 2018
FUNDING STRUCTURE AT Transurban3 31 DECEMBER 2018 BBB+/Baa1/A- Non-Recourse Corporate Sydney Brisbane North America Working EMTN capital2 EUR2.1B $1.7B 495 Express 95 Express M2 LCT CCT ED3 M73 M5 West STP TQ3 A25 Lanes Lanes3 Letter of Maple Credit -/A3/A- -/A3/A- BBB/-/- BBB/-/BBB CAD0.9B $1.2B AU
Slide 50: Group Debt at December 2018
GROUP DEBT AT 31 DECEMBER 2018 FACILITY FACILITY FACILITY TOTAL FACILITY TOTAL DRAWN PROPORTIONAL STATUTORY (USD M)1 (CAD M)1 ($M)1 ($M)2 ($M) 2 DRAWN ($M) 2 DRAWN ($M)3 CORPORATE DEBT2 Working capital facilities4 - - 1,650 1,650 - - - USPP 162 - 520 749 749 749 773 EMTN (CAD, NOK and EUR Notes) 305
Slide 51: Drawn Debt
DRAWN DEBT1 30 JUN 18 31 DEC 18 MOVEMENT AUD2 ($M) ($M) ($M) EXPLANATION Corporate 4,613 4,359 (254) Maturity of $254 million USPP issuance Issued proportionally $1,020 million of bank debt at M4. Acquired proportionally $283 million in bank debt and proportionally $438 million in Government debt at
Slide 52: Key Debt Metrics
KEY DEBT METRICS 30 JUNE 2018 31 DEC 2018 TRANSURBAN NON- TRANSURBAN NON- GROUP CORPORATE RECOURSE GROUP CORPORATE RECOURSE Weighted average maturity (years)1,2 9.6 years 5.9 years 12.1 years3 9.1 years 6.1 years 10.9 years4 Weighted average cost of AUD debt1,5 4.9% 5.5% 4.5% 4.7% 5.4% 4.3% Weighted
Slide 53: Extension of Group Debt Maturity Profile
EXTENSION OF GROUP DEBT MATURITY PROFILE June 2018 maturity profile1,2,3 8,000 7,000 Existing debt refinanced during 6,000 HY19 $ MILLION 5,000 4,000 3,000 2,000 1,000 - FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 - 29 FY30 - 34 FY35+ December 2018 maturity profile1,2,3 8,000 7,000 New debt 6,000 raised
Slide 54: Corporate Debt Maturities at December 2018
CORPORATE DEBT MATURITIES AT 31 DECEMBER 2018 Working capital facilities USPP EMTN 144A Letters of credit facilities 2,000 1,800 1,600 225 1,400 1,200 $ MILLION 778 1,000 831 800 997 600 206 230 915 733 400 833 866 706 675 200 360 375 233 219 94 - FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY
Slide 55: Non-Recourse Debt Maturities at December 2018
NON-RECOURSE DEBT MATURITIES AT 31 DECEMBER 2018 TQ ED M2 M5 M7 LCT CCT WestConnex M4 WestConnex M5 WestConnex M4-M5 495 Express 95 Express A25 4,400 4,000 673 3,600 3,200 2,800 4 A$ MILLION 597 2,400 2,000 2,800 4 2,000 527 1,600 1,500 278 2,000 82 1,200 200 350 100 20 800 98 600 40 4 535 1,429 400
Slide 56: Hedging Profile
HEDGING PROFILE TRANSURBAN INTEREST RATE HEDGING PROFILE1 30,000 • 98.0% of debt is interest rate hedged as at 31 December 2018 North America NSW QLD Corporate Fixed amount 25,000 • Hedge tenor is matched to the tenor of the debt on 97.2% of drawn debt2 20,000 • CAD650 million CAD Notes $ MILLION is
Slide 57: Diversified Funding Sources
DIVERSIFIED FUNDING SOURCES Debt funding activities DEC 18 GROUP DEBT2 Major debt issuances1 during 1H19: BANK DEBT • $615 million M7 USPP Notes AMTN • CAD650 million CAD Notes at Corporate AUD PRIVATE PLACEMENT • CAD200 million CAD Notes at Cardinal (A25) CAD NOTES • $676 million Corporate letter o
Slide 58: Corporate Overview
CORPORATE OVERVIEW Incident response Melbourne
Slide 59: Summarised Group Structure
SUMMARISED GROUP STRUCTURE 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 holding asset and financin
Slide 60: Asset Portfolio at 31 December 2018
ASSET PORTFOLIO AT 31 DECEMBER 2018 MELBOURNE SYDNEY OVERVIEW CITYLINK M5 WEST3 M2 M4 ED M7 LCT CCT Opening date Dec 2000 Aug 1992 May 1997 May 1992 Dec 1999 Dec 2005 Mar 2007 Aug 2005 Remaining concession period1 16 years 8 years 29 years 42 years 30 years 29 years 29 years 17 years Concession end
Slide 61: Asset Portfolio at 31 December 2018
ASSET PORTFOLIO AT 31 DECEMBER 2018 BRISBANE NORTH AMERICA GATEWAY LOGAN GO BETWEEN LEGACY AIRPORTLINK 495 EXPRESS 95 EXPRESS OVERVIEW CLEM7 A257 MOTORWAY MOTORWAY BRIDGE WAY M7 LANES5 LANES6 Opening date Dec 1986 Dec 1988 Mar 2010 Jul 2010 Jun 2015 Jul 2012 Nov 2012 Dec 2014 May 2011 Remaining conc
Slide 62: Future Concession Assets
FUTURE CONCESSION ASSETS1 SYDNEY MELBOURNE NEW M4 ROZELLE OVERVIEW NORTHCONNEX M5 WEST2 NEW M53 M5 EAST M4-M5 LINK WEST GATE TUNNEL TUNNELS INTERCHANGE Concession end date Jun 2048 Dec 2060 Dec 2060 Dec 2060 Dec 2060 Dec 2060 Dec 2060 Jan 2045 PHYSICAL DETAILS Length – total 9 km 22 km 6.5 km 11 km
Slide 63: Tolling Escalation
TOLLING ESCALATION MOTORWAY ESCALATION MOTORWAY ESCALATION M2 Tolls escalate quarterly by the greater of quarterly CPI or 1% West Gate Tolls escalate quarterly an equivalent of 4.25% per annum from construction Tunnel1 completion to 30 June 2029 and quarterly CPI thereafter Car tolls escalate quarte
Slide 64: HSE
HSE 1H19 safety performance Safety Transurban RICI • Road injury crash index (RICI) has remained • Domestic violence awareness steady since 2016 training implemented as part of – average rate of approximately 4.9 per period Transurban’s Health and – 160 serious injury road crashes for 1H19, Wellbein
Slide 65: Glossary
GLOSSARY Gateway Upgrade North
Slide 66: Glossary
GLOSSARY TERM DEFINITION TERM DEFINITION 1H/2H First or second half of a financial year FY Financial year 1 July to 30 June A25 A25 toll road GLIDE Transurban’s tolling back-office system Average Daily Traffic. ADT is calculated by dividing the total number of trips on each asset GUN Gateway Upgrade
Slide 67: Glossary
GLOSSARY TERM DEFINITION TERM DEFINITION PAB Private Activity Bond USD US Dollars NWRG NorthWestern Roads Group USPP US Private Placement O&M Operations and Maintenance VDOT Virginia Department of Transportation OTHER VTIB Virginia Transportation Infrastructure Bank Other revenue includes interopera