Transurban Group Ltd. · ASX:TCL
Transurban — Investor Day (March 2009)
61 slides from Transurban's investor day presentation, Mar 20, 2009
Slide 1: ASX release: Investor Presentation
asx release For personal use only 20 March 2009 Investor Presentation Please find attached a presentation which will be provided at a Transurban investor day today. Elizabeth Mildwater Company Secretary Investor & media enquiries Henry Byrne +61 (0) 438 564 245 Head of Investor Relations Classificat
Slide 2: Transurban investor day 20 March 2009
For personal use only Transurban investor day 20 March 2009
Slide 3: Disclaimer
Disclaimer For personal use only This publication is prepared by the Transurban Group comprising Transurban Holding Limited (ACN 098 143 429), Transurban Holding Trust (ARSN 098 807 419) and Transurban International Limited (ARBN 121 746 825). The responsible entity of Transurban Holding Trust is Tr
Slide 4: Agenda
Agenda For personal use only Time Presentation Speaker Tom Honan 10:00am Introduction Chief Financial Officer Brendan Bourke 10:30am Transurban operations Chief Operating Officer Andrew Head 11:30am Australian development Group General Manager Strategy and Corporate Development Michael Kulper 12:15p
Slide 5: Introduction
For personal use only Introduction Chief Financial Officer Tom Honan
Slide 6: Transurban investment proposition
Transurban investment proposition For personal use only 5
Slide 7: Debt facilities – refinancing progress
For personal use only Debt facilities – refinancing progress
Slide 8: Refinancings on target
Refinancings on target For personal use only Corporate debt Non-recourse debt Amount Amount Debt Maturity Debt Maturity $M $M FY09 Undrawn Facility $85 Jun 2009 FY09 Hills M2 Non-recourse $459 Jun 2009 Unwrapped Bonds $150 Dec 2009 M1 – Term Bank Debt $516 Nov 2009 FY10 FY10 Undrawn Facility $195 Ju
Slide 9: Non-recourse debt refinancing
Non-recourse debt refinancing Debt backed by strong cash flows at asset level For personal use only Refinancing requirements - 5 year forward view at half yearly intervals 600 AUD $ million (equivalent if USD) 500 M1 M5 M7 M7 400 M2 300 $500m $459m $515.5m $500m $500m 200 100 ICR ICR ICR ICR ICR 1.6
Slide 10: Corporate debt refinancing
Corporate debt refinancing No major near term refinancing For personal use only Refinancing requirements - 5 year forward view at half yearly intervals $320m $300m $375m $85m $150m $195m Existing facilities • Retiring $85m of working capital maturing in June 2009 9
Slide 11: Transurban operations
For personal use only Transurban operations Chief Operating Officer Brendan Bourke
Slide 12: Transurban Operations
Transurban Operations Maximise revenue For personal use only Optimise cost Reduce risk 11
Slide 13: Tolling & Customer Management
Tolling & Customer Management For personal use only No Payment b. Violation and Enforcement 1. “Asset” Services Arrangement •Toll notices a. Revenue capture •Penalty notices •Court proceedings •Roadside Equipment monitoring •Trip reconstruction •Image processing •Trip rating / pricing •Interoperabil
Slide 14: Key competencies
Key competencies For personal use only • Scale and Complex Tolling operations – – End to end view – – Leverage across Australian footprint • Electronic tolling and traffic management (ETTM) • Concession management • Construction oversight • Traffic modelling 13
Slide 15: Competency – examples
Competency – examples For personal use only • Scale and Complex Tolling operations Use of imaging technology to progressively address imaging underperformance (versus – – Large scale interoperability processing by ideal) led to reduced image deletion CityLink - 2.5 million trips per month – – Improv
Slide 16: Monash-CityLink-West Gate upgrade project
Monash-CityLink-West Gate upgrade project For personal use only Optimising throughput on the State’s busiest and most strategically important freeway route Project objectives CityLink upgrade an integral component Project scope Upgrading Monash-CityLink-West Gate freeways State of the art freeway ma
Slide 17: MCW project scope
For personal use only 16 MCW project scope
Slide 18: Southern Link Upgrade: Intelligent Transportation Systems
Southern Link Upgrade Intelligent Transportation Systems For personal use only Advanced Traffic Monitoring = Rapid Incident Detection Full CCTV camera surveillance of road Automatic incident detection (video based) Coordinated Corridor Response = Motorist Safety / Minimised Impact of Congestion Cent
Slide 19: Conclusion
Conclusion For personal use only • Unlocking value in Transurban network • Leveraging owner-operator competencies • Delivery of Monash-CityLink-Westgate upgrade on track – Asset tour as a part of today’s activities to show: • Construction progress • Operational activities at CityLink control centre
Slide 20: Australian development
For personal use only Australian development Group General Manager Strategy and Corporate Development Andrew Head
Slide 21: Prioritising Australian growth opportunities
Prioritising Australian growth opportunities For personal use only Current TCL assets Other opportunities • Understand value drivers & opportunities • Evaluate & prioritise utilising clear investment – Growth in asset corridors criteria – Asset enhancements – Greenfield – VIC, NSW, QLD – Increase po
Slide 22: The filtering process
The filtering process For personal use only Strategic fit Likelihood project will proceed Competitive advantage / likelihood of success Strategy and Prioritisation Risks – transaction, project etc Resource requirement Valuation ExCo strategy ExCo Strategy Team team review 21
Slide 23: Sydney network enhancements
Sydney network enhancements For personal use only 22
Slide 24: M2 upgrade project
M2 upgrade project For personal use only 5 3 2 4 6 1 Pennant Hills Rd to Herring Rd Ramps 1 Windsor Rd Ramps 3 5 Terrys Ck Eastbound and Park and Ride Windsor Road to Lane Cove Road to Terrys Creek to Lane 2 Pennant Hills Rd 4 Pennant Hills Road 6 Cove Rd Eastbound Eastbound Westbound T2 / Bus Lane
Slide 25: Process and milestones
Process and milestones M2 upgrade first project in NSW to be assessed according to the For personal use only Government’s Working With Government Guidelines Future steps: • In principle agreement (confirm scope, financial parameters) Dec 07 Jun 08 Sep 08 Feb 09 Proposal Project announcement First Le
Slide 26: M2 upgrade – remaining hurdles
M2 upgrade – remaining hurdles For personal use only • Value drivers – Additional toll points attracting new trips to the motorway – Additional traffic by removing capacity constraints • Government options for the funding shortfall? – Concession extension – Roll forward a scheduled toll increase – G
Slide 27: M5
M5 For personal use only • M5 widening – another enhancement proposal being considered by the NSW Government • Preliminary proposal submitted to the Government • Project further developed following greater certainty on M2 process 26
Slide 28: Conclusion
Conclusion For personal use only • MCW upgrade underway in Melbourne – on time and on budget • Will evaluate opportunities in Australian market • Focus on enhancement projects in Sydney • M2 upgrade the primary focus • M5 upgrade to be progressed after more tangible progress on M2 – not willing to i
Slide 29: North America
For personal use only North America President Transurban North America Michael Kulper
Slide 30: US political environment
US political environment For personal use only • Demand for road transport solutions remains – $34 billion annual unmet need to maintain existing roads and infrastructure • Economic stimulus package not a silver bullet – Expected to support basic maintenance and projects already under construction •
Slide 31: Growth strategy
Growth strategy For personal use only • Applies filtering process • Targeted approach – 2 markets with potential for multiple (network) project opportunities – Current focus is Virginia • HOT lanes – Leverage market leadership position in managed lane projects • Owner-operator approach – Differentia
Slide 32: Pocahontas
Pocahontas 895 For personal use only • Generates circa 2% of Transurban Group proportional toll and fee revenue • Traffic declined in 2008 amid deterioration in US economy – Recession in Virginia and US more broadly • Toll price increases • Investment case built around land use change – Anticipated
Slide 33: Virginia HOT Lanes projects
Virginia HOT Lanes projects For personal use only A video showing details of HOT lanes projects can be found on the Transurban website under the North American tab: www.transurban.com 32
Slide 34: Capital Beltway Investment Proposition
Capital Beltway Investment Proposition For personal use only Traffic and revenue – Heavy current congestion – Limited ability to build out within existing corridor – Limited competing routes – Demographic characteristics Contractual arrangements / risk sharing – Strong contractual arrangements with
Slide 35: Capital Beltway
Capital Beltway For personal use only • One year into five-year construction period • Experienced management team • Business, functional and technical requirements in development • Traffic in Beltway corridor remains strong during peak periods 34
Slide 36: Capital Beltway: 2006-2008 Volume Comparison
Capital Beltway For personal use only 2006-2008 Volume Comparison (Weekday Average) (South Bound between Dulles Toll Road and Georgetown Pike) Capital Beltway traffic remains in line with pre-recessionary levels* *This trend is also seen on other sections of the road 35
Slide 37: I-95 negotiations
I-95 / 395 negotiations For personal use only • Initial environmental clearance for the Northern section achieved January 2009 • Major activities to financial close: – Contract negotiations – Finalise scope definition and pricing – Finalise other regulatory approvals – Project funding 36
Slide 38: Conclusion
Conclusion For personal use only • Activities focused on Virginia market • Highest priority is Capital Beltway delivery • I-95 negotiations in process • No other near term opportunities currently being pursued • Market evolution likely to present opportunities in medium to longer term 37
Slide 39: Transurban investor day March 2009
For personal use only Transurban investor day 20 March 2009
Slide 40: Appendix: Reporting methodology
For personal use only Appendix 1 Reporting methodology
Slide 41: Statutory reporting
Statutory reporting For personal use only • Includes 100% of the results of Transurban controlled assets: – CityLink – Hills M2 – M1 Eastern Distributor – M4 • The after-tax results of non-controlled assets are “equity accounted”1: – M5 (50%) – DRIVe (75%) – Drive holds investments in Pocahontas 895
Slide 42: Other matters to note
Other matters to note For personal use only • Limitation of individual statutory accounts – Do not include fair value acquisition adjustments – Include intercompany transactions and financing that eliminates on group consolidation • Business development revenue – Statutory ‘Other revenue’ includes B
Slide 43: Proportional result
Proportional result For personal use only • This provides a better reflection of operating performance of business • Proportional reporting is based on Transurban’s ownership of assets – Aggregates individual P&L from each asset (multiplied by Transurban’s percentage ownership) and Transurban Corpor
Slide 44: Underlying proportional result
Underlying proportional result For personal use only • EBITDA adjusted for one off items (if present) to reflect underlying business performance • Adjustments in FY08 include: – Gain on asset sales (Pocahontas in FY08) – Mark-to-market positions eg. CEU gain/(loss) – Restructuring costs – CEO transi
Slide 45: Free cash
Free cash 31 Dec 08 $M Source of information/Explanation For personal use only Cashflow from Operating 1 168.4 Statutory cash flow (includes cash inflow from M7 TLNs ) Activities Cashflow from Operating (84.6) Individual asset statutory cash flow (100% consolidated for statutory reporting) Activitie
Slide 46: AASB-I – Key issues summary
AASB-I 12 – Key issues summary For personal use only • AASB Interpretation 12 application mandatory for the year ended 30 June 2009 • Applied retrospectively – from first period presented – 1 July 2007 • Major impacts – A. Classification of assets – B. Treatment of construction and upgrade services
Slide 47: A. AASB-I – Classification of assets
A. AASB-I 12 – Classification of assets For personal use only • All assets to be handed back to the grantor (State Governments) are classified as intangibles as they represent Transurban’s right to collect tolls • All assets retained by Transurban remain as Property, Plant & Equipment • Concession a
Slide 48: B. AASB-I – Construction and upgrade services
B. AASB-I 12 – Construction and upgrade services For personal use only • Account for construction and upgrade as a construction contract (recognising contract revenue and expenses on a gross basis) • Transurban has not recognised a margin on construction services i.e. there is no net impact to the p
Slide 49: C. AASB-I – Maintenance provision and expense
C. AASB-I 12 – Maintenance provision and expense For personal use only • A provision is built up on a usage basis – Based on time lapse to when works undertaken • Provision represents Transurban’s obligation to maintain the assets as a result of past use • Two types: – Requirement to hand back asset
Slide 50: C. AASB-I – Maintenance provision and expense
C. AASB-I 12 – Maintenance provision and expense For personal use only • Recorded at present value of the provision • P&L charge each year effectively represents average annual maintenance capex over the life of the provision i.e. provision is built up on a usage basis Impact Transurban’s obligation
Slide 51: C. AASB-I – Maintenance provision and expense
C. AASB-I 12 – Maintenance provision and expense For personal use only • The following is an example of the building up of the provision for ongoing major maintenance expenditure over the life of the concession • Examples: 1. Resurfacing obligation (assumes road is used from year 3 and works perform
Slide 52: Appendix: Asset snapshots
For personal use only Appendix 2 Asset snapshots
Slide 53: CityLink
CityLink For personal use only CityLink Melbourne Location Location Melbourne, Australia Ownership Transurban 100% Concession length 34 years, expires January 2034 and expiry Description CityLink is the key connector between Melbourne’s airport, port, CBD and manufacturing hubs. It consists of two s
Slide 54: Hills M2
Hills M2 For personal use only Hills M2 Location Location Sydney, Australia Ownership Transurban 100% Concession length 45 years, expires May 2042 and expiry Description Hills M2 services both westbound and eastbound traffic between the Sydney suburbs of North Ryde and Seven Hills. The majority of t
Slide 55: Westlink M7
Westlink M7 For personal use only Westlink M7 Location Location Sydney, Australia Ownership Transurban 50% Concession length 31 years, expires February 2037 and expiry Description Westlink M7 connects to the M2, M4 and M5 motorways and the Hume Highway. It is the only arterial through Western Sydney
Slide 56: M1 Eastern Distributor
M1 Eastern Distributor For personal use only M1 Eastern Distributor Location Location Sydney, Australia Ownership Transurban 75.1% Concession length 48 years, expires July 2048 and expiry Description The Eastern Distributor links the CBD, Harbour Tunnel, Harbour Bridge and the Cross City Tunnel (CCT
Slide 57: M5 Motorway
M5 Motorway For personal use only M5 Motorway Location Location Sydney, Australia Ownership Transurban 50% Concession length 31 years (initially 30 years, the concession was extended and expiry by 1.11 years after M5 Road Improvements), expires September 2023 Description The M5 connects Sydney’s CBD
Slide 58: M4 Motorway
M4 Motorway For personal use only M4 Motorway Location Location Sydney, Australia Ownership Transurban 50.61% Concession length 18 years, expires February 2010 and expiry Description The M4 Motorway links Western Sydney to the inner west. There are three lanes in both directions for the majority of
Slide 59: Pocahontas
Pocahontas 895 For personal use only Pocahontas 895 Location Location Virginia, United States Ownership DRIVe co-investment vehicle holds 100% of Pocahontas Transurban holds a 75% interest in DRIVe Concession length 99 years, expires 2105 and expiry Description Pocahontas 895 comprises two lanes in
Slide 60: Capital Beltway
Capital Beltway For personal use only Capital Beltway Location Location Northern Virginia, United States Ownership DRIVe co-investment vehicle holds 90% of Capital Beltway Transurban holds a 75% interest in DRIVe Concession length 80 years, expires 2087 and expiry 5 year construction, 75 years of op
Slide 61: For personal use only
For personal use only