Transurban Group Ltd. · ASX:TCL
Transurban — H1 FY2012 Earnings Presentation
66 slides from Transurban's earnings presentation, Feb 7, 2012
Slide 1: ASX release: Transurban Investor Presentation
asx release For personal use only 7 February 2012 Transurban Investor Presentation Please find attached the Investor Presentation that will be given to analysts this morning. Amanda Street Company Secretary Investor enquiries Wesley Ballantine +61 (3) 8656 8904 General Manager, Investor Relations, M
Slide 2: Transurban 2012 Half Year Results
For personal use only TRANSURBAN 2012 HALF YEAR RESULTS EARNINGS GROWTH WITH DISCIPLINED INVESTMENT 7 FEBRUARY 2012
Slide 3: Disclaimer and Basis of Preparation
DISCLAIMER AND BASIS OF PREPARATION 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 Trans
Slide 4: Transurban Investment Proposition
TRANSURBAN INVESTMENT PROPOSITION For personal use only Proven volume growth Strong free cash Price increases at CPI or better Cost base that can be leveraged Proportional EBITDA CAGR1 of 11.1% Robust balance sheet with 2.7x over last three years Premium ASX defensive exposure interest cover rat
Slide 5: Agenda
AGENDA For personal use only 1. Highlights and corporate update 2. Financial results 3. Financing 4. Asset review 5. Conclusion 6. Appendices Investor and media enquiries: Wesley Ballantine +61 3 8656 8904 3
Slide 6: Highlights
HIGHLIGHTS For personal use only Outstanding safety Safety improvements p. 6 EBITDA growth EBITDA growth despite road disruptions p. 16 Hills M2 Upgrade and Growth pipeline delivering Capital Beltway on track p.9 Declared half year distribution 3.5 cents fully franked of 14.5 cents dividend included
Slide 7: Further Value Creation
CORPORATE UPDATE For personal use only FURTHER VALUE CREATION 14.5 cents distribution per stapled security announced for six months ending 31 December 2011, including 3.5 cents fully franked component Finance • $520 million of non-recourse project debt refinanced for Transurban’s 75.1% owned M1 East
Slide 8: Safety
SAFETY For personal use only EMBEDDING A CULTURE OF SAFETY • M1 Eastern Distributor and Lane Cove Tunnel added to AS4801 accreditation in October 2011 • CityLink Upgrade changes improving motorist safety: − Freeway management system providing significant safety improvement to road users − Ongoing aw
Slide 9: Distribution Growth
DISTRIBUTION GROWTH For personal use only DISTRIBUTION GUIDANCE CONFIRMED, FRANKED COMPONENT ADDED • Interim distribution of 14.5 cents DISTRIBUTIONS • Interim distribution inclusive of 3.5 cents fully franked dividend • Third year of robust distribution growth • FY12 distribution guidance of at lea
Slide 10: Key Achievements
KEY ACHIEVEMENTS For personal use only GROWTH THROUGH DISCIPLINED INVESTMENT • CityLink Western Link resheeting works largely complete • Hills M2 Upgrade construction 50% complete • Capital Beltway construction >80% complete • Development agreements: – M5 in-principle agreement – I-95 non-binding ag
Slide 11: Delivering
DELIVERING For personal use only • Growth pipeline delivering – M2 Upgrade construction progressing – 50% complete – CBE construction progressing well – >80% complete – I-95 HOT Lanes non-binding agreement reached – M5 widening reached in-principle agreement Figures for prior years reflect Proportio
Slide 12: Financial Results
For personal use only FINANCIAL RESULTS TOM HONAN – CHIEF FINANCIAL OFFICER
Slide 13: Statutory Results
STATUTORY RESULTS For personal use only • Net profit $96.6 million (2011: $76.0 million profit) - 27.1% • Toll revenue $385.6 million (2011: $361.9 million) - 6.5% • Fee and other road revenue $38.7 million (2011: $37.9 million ) - 2.1% • EBITDA (statutory basis) $317.5 million (2011: $293.4 m
Slide 14: Statutory Results: Income Statement
STATUTORY RESULTS For personal use only INCOME STATEMENT HALF YEAR ENDED 31 DECEMBER 2011 31 DEC 11($M) 31 DEC 10($M) % CHANGE Toll revenue 385.6 361.9 6.5% Fee and other road revenue 38.7 37.9 2.1% Construction revenue 138.6 55.8 148.4% Business development and other revenue 7.8 7.9 (1.3%)
Slide 15: Proportional Result
PROPORTIONAL RESULT For personal use only HALF YEAR ENDED 31 DECEMBER 2011 31 DEC 11($M) 31 DEC 10($M) % CHANGE Toll revenue 473.8 446.9 6.0% Fee revenue 32.1 28.7 11.8% Other revenue 15.7 12.2 28.7% Total Revenue 521.6 487.8 6.9% Operating costs (108.3) (106.5) (1.7%) Business development
Slide 16: Asset Snapshot
ASSET SNAPSHOT For personal use only ROBUST TRAFFIC GROWTH DESPITE CONSTRUCTION IMPACTS • CityLink delivered 8.0% toll revenue growth – despite Western Link resheeting • Hills M2 and LCT impacted by construction – activity intensified in second quarter % OF PROP TOLL TOLL REVENUE ASSET TRAFFIC GROWT
Slide 17: Toll Revenue Growth
TOLL REVENUE GROWTH For personal use only CITYLINK LEADING GROWTH • CityLink - Southern PROPORTIONAL TOLL REVENUE GROWTH Link maturing post 500 upgrade, Western Link 490 impacted by extensive resheeting works 480 7.5 473.8 $ 'Millions • Hills M2 and Lane 470 17.6 0.2 1.3 2.4 Cove Tunnel revenue 460
Slide 18: EBITDA Growth
EBITDA GROWTH For personal use only CONTINUING COST CONTROL • Proportional EBITDA grew 7.5% PROPORTIONAL EBITDA GROWTH • EBITDA growth 400 enhanced by continued 395 4.3 390.0 26.9 0.2 cost discipline 390 0.3 (0.8) (0.7) 385 (2.1) (0.9) • Costs impacted by full 380 $ 'Millions half of Lane Cove 375 T
Slide 19: Free Cash Flow
FREE CASH FLOW For personal use only TIMING DIFFERENCES IMPACTING FIRST HALF • Interim distribution of 14.5 cents declared – inclusive of 3.5 cent fully franked dividend • FY12 distribution guidance of at least 29 cents confirmed – forecast to be fully backed by free cash FREE CASH FLOW 31 DEC 11 ($
Slide 20: Reconciliation of Free Cash
RECONCILIATION OF FREE CASH For personal use only 31 DEC 11 ($M) 31 DEC 10 ($M) % CHANGE Proportional EBITDA 390.0 362.8 7.5% Adjusted for proportional: Maintenance provision 11.7 10.1 15.8% Operating and working capital movements (15.7) (3.5) (348.6%) Non-cash items (1.1) (0.2) (450.0%) Net interes
Slide 21: Finance Costs
FINANCE COSTS For personal use only NET FINANCE COSTS PAID 31 DECEMBER 2011 NON-CASH ITEMS CONCESSION STATUTORY ACCRETION OF NET PROPORTIONAL DEBT FEE DISCOUNT AND OWNERSHIP NET FINANCE TIFIA, TLN & OTHER INTEREST NET INTEREST AMORTISATION MAINTENANCE COSTS USPP PAID PAID UNWIND Controlled entities
Slide 22: Financing
For personal use only FINANCING TOM HONAN – CHIEF FINANCIAL OFFICER
Slide 23: Financing Highlights
FINANCING HIGHLIGHTS For personal use only $375 million corporate bank debt refinanced well in advance Access to new debt markets via newly established EMTN1 Programme No corporate maturities until April 2013 Senior debt ratings affirmed A-/Baa1/A- stable (S&P/Moody’s/ Fitch) Interest saving
Slide 24: Reliable Funding
RELIABLE FUNDING For personal use only $1.2 BILLION FINANCED IN PAST SIX MONTHS • $675 million corporate debt refinanced – corporate bonds, working capital facilities and term debt • $520 million asset debt refinance – M1 Eastern Distributor 22
Slide 25: Funding Snapshot
FUNDING SNAPSHOT For personal use only REFINANCING ACTIVITIES • No material corporate refinancing requirements in next 12 months • M5 debt to be refinanced in conjunction with widening project • M7 refinance expected to occur well ahead of December maturity DEBT MATURITIES1 – 5 YEAR FORWARD VIEW Cor
Slide 26: Financial Conclusion
FINANCIAL CONCLUSION For personal use only STRONG UPLIFT IN EBITDA, STABLE BALANCE SHEET • Interim distribution of 14.5 cents declared – guidance of full year distribution of at least 29 cents confirmed (further franking credits available) • Free cash growth impacted by timing differences to be reve
Slide 27: Asset Review
For personal use only ASSET REVIEW CHRIS LYNCH– CHIEF EXECUTIVE OFFICER
Slide 28: Asset Performance Highlights
ASSET PERFORMANCE HIGHLIGHTS For personal use only STRONG ORGANIC GROWTH & ENHANCEMENTS ON TRACK CityLink delivering significant growth following Southern Link Upgrade despite extensive resheeting program Hills M2 Upgrade construction 50% complete – traffic impacts in line with expectations Capi
Slide 29: Sydney Assets
SYDNEY ASSETS For personal use only % OF PROP TOLL TOLL REVENUE ASSET TRAFFIC GROWTH (%) EBITDA GROWTH (%) REVENUE GROWTH (%) 15.3% Hills M2 (4.6%) (2.2%) (3.6%) 6.5% Lane Cove Tunnel1 (0.2%) 32.3% 27.5% 7.5% M1 Eastern Distributor 0.8% 0.5% (2.8%) 10.7% Westlink M7 1.9% 4.9% 4.1% 9.2% M5 0.7% 3.1%
Slide 30: Hills M2 Motorway: Significant Progress on Widening
HILLS M2 MOTORWAY For personal use only SIGNIFICANT PROGRESS ON WIDENING • 50% complete and on budget – full completion scheduled for first half 2013 • Tunnel excavation progressing well • Windsor Road ramps due to open and commence tolling in second quarter 2012 28
Slide 31: Hills M2 Motorway: Upgrade Business Case
HILLS M2 MOTORWAY For personal use only UPGRADE BUSINESS CASE • Commenced construction January 2011 HILLS M2 TRAFFIC UPLIFT • Traffic impacts from construction in- line with business case No Project AADT Traffic Volumes Impact Existing New Ramps Net Impact Observed With Project (existing toll points
Slide 32: M5 South West Motorway: Widening Interim Agreement
M5 SOUTH WEST MOTORWAY For personal use only WIDENING INTERIM AGREEMENT SIGNED IN DECEMBER Project • Widen asset to three lanes in each direction • $400 million total cost - $350 million by Interlink Business case/return • Concession extended 3.3 years to December 2026 • Truck toll multiplier raised
Slide 33: M5 South West Motorway: Targeted Timeline
M5 SOUTH WEST MOTORWAY For personal use only WIDENING INTERIM AGREEMENT SIGNED IN DECEMBER TARGETED TIMELINE TO COMPLETION December 2011 In-principle agreement reached with NSW Government First half 2012 Financial close targeted Mid 2012* Construction targeted to commence First half 2015* Constructi
Slide 34: Melbourne CityLink
MELBOURNE CITYLINK For personal use only % OF PROP TOLL TOLL REVENUE GROWTH ASSET TRAFFIC GROWTH (%) EBITDA GROWTH (%) REVENUE (%) 49.7% CityLink 2.3% 8.0% 10.3% • Strong revenue growth despite significant road works • Southern link continued strong growth (3.5%) following upgrade • Western Link res
Slide 35: Melbourne CityLink: Upgrade Business Case on Track
MELBOURNE CITYLINK For personal use only UPGRADE BUSINESS CASE ON TRACK • On track to achieve 7% growth by 2016 (over ‘no project’ case) • Growth moderating to long term sustainable profile 33
Slide 36: United States Assets: Pocahontas
UNITED STATES ASSETS POCAHONTAS – CONTINUED MODERATE GROWTH For personal use only % OF PROP TOLL TOLL REVENUE GROWTH ASSET TRAFFIC GROWTH (%) EBITDA GROWTH (%) REVENUE (%) 1.1% Pocahontas (USD) 0.6% 3.9% 9.4% • Pocahontas – modest traffic growth as Richmond area economy shows initial signs of improv
Slide 37: Capital Beltway Express
CAPITAL BELTWAY EXPRESS EXCELLENT PROGRESS – ON TIME, ON BUDGET For personal use only • Construction >80% complete • On time and on budget • Transurban team has moved into permanent Operations Centre • Completion scheduled for end of calendar year 2012 • Toll revenue to be generated within 12 months
Slide 38: Capital Beltway Express: Express Lanes
CAPITAL BELTWAY EXPRESS “HOT” LANES ARE NOW “EXPRESS” LANES For personal use only • HOT Lanes rebranded as 495 Express Lanes • Updated website launched in early January 2012 • Marketing campaign to ramp up in final year of construction – focus on driver education www.495expresslanes.com 36
Slide 39: I-95 Express Lanes: In-Principle Agreement
I-95 EXPRESS LANES For personal use only IN-PRINCIPLE AGREEMENT REACHED An in-principle agreement on scope was reached in December 2011: • Complete a 29-mile (46-kilometre) HOT Lane facility from Fairfax to Stafford County • Facility will be ‘reversible’ (i.e. will operate in the direction of peak t
Slide 40: I-95 Express Lanes: Key Milestone Reached
I-95 EXPRESS LANES For personal use only KEY MILESTONE REACHED TARGETED TIMELINE TO COMPLETION December 2011 In-principle, non-binding agreement reached 2012 Financial close targeted 2015* Construction completion targeted Dates are indicative and subject to final scope and timing of financial close
Slide 41: Conclusion
CONCLUSION For personal use only Operational excellence Portfolio enhancements New project opportunities • 7.5% growth in • CityLink upgrade on track to • I-95 in-principle agreement proportional EBITDA deliver 7% uplift by 2016 reached • Interim distribution of • Hills M2 construction - 50% • Capit
Slide 42: Appendix – Detailed Financials
For personal use only APPENDIX 1 – DETAILED FINANCIALS
Slide 43: Free Cash Flow
FREE CASH FLOW For personal use only 31 DEC 11 ($M) 31 DEC 10 ($M) % CHANGE Cashflows from operating activities (Refer Group Statutory Accounts) 182.8 181.6 M7 Term Loan Notes received (10.4) (18.3) Payments for maintenance capital expenditure 13.1 15.3 Cashflows from operating activities – M1 and M
Slide 44: Reconciliation: Statutory EBITDA to Proportional EBITDA
RECONCILIATION For personal use only STATUTORY EBITDA TO PROPORTIONAL EBITDA 31 DEC 11($M) 31 DEC 10 ($M) % CHANGE Statutory EBITDA 317.5 293.4 8.2% Less: EBITDA attributable to non-controlling interests (M1 ED and M4) (9.0) (9.1) 1.1% Add M5 Proportional EBITDA 39.9 38.6 3.4% Add: M7 Proportional E
Slide 45: Reconciliation: Statutory Income Statement to Results by Asset 2011
RECONCILIATION STATUTORY INCOME STATEMENT TO RESULTS BY ASSET – 31 DECEMBER 2011 For personal use only OFFSET OTHER CONSTRUCTION REALLOCATION STATUTORY NET BUSINESS $M REVENUE ACCOUNTING OF CAPITALISED TOTAL P&L DEVELOPMENT REALLOCATION DISCLOSURE UNDER COSTS AASB I 12 Toll revenue 385.6 - - - - 385
Slide 46: Result by Asset – Consolidated Assets December 2011
RESULT BY ASSET – 100% CONSOLIDATED ASSETS – 31 DECEMBER 2011 For personal use only LANE COVE $M CITYLINK HILLS M2 TOLLAUST M1 ED ROAM OTHER TOTAL TUNNEL Toll revenue 235.4 72.4 30.7 - 47.1 - - 385.6 Fees and other revenue 21.2 1.1 0.7 3.6 - 8.2 4.8 39.6 Total revenue 256.6 73.5 31.4 3.6 47.1 8.2 4.
Slide 47: Result by Asset – Equity Assets December 2011
RESULT BY ASSET – 100% EQUITY ASSETS – 31 DECEMBER 2011 For personal use only M5 WESTLINK POCAHONTAS CAPITAL $M DRIVE TOTAL MOTORWAY M7 895 BELTWAY Toll revenue 87.8 101.5 7.0 - - 196.3 Fee and other revenue 5.4 1.4 0.1 - - 6.9 Total revenue 93.2 102.9 7.1 - - 203.2 Total cost (13.4) (22.5) (2.6) -
Slide 48: Reconciliation: Statutory Income Statement to Results by Asset 2010
RECONCILIATION For personal use only STATUTORY INCOME STATEMENT TO RESULTS BY ASSET – 31 DECEMBER 2010 OFFSET OTHER CONSTRUCTION REALLOCATION STATUTORY NET BUSINESS STATUTORY INCOME STATEMENT TO EBITDA – 30 JUNE 2010 $M P&L REVENUE REALLOCATION DEVELOPMENT ACCOUNTING DISCLOSURE UNDER OF CAPITALISED
Slide 49: Result by Asset – Consolidated Assets December 2010
RESULT BY ASSET – 100% CONSOLIDATED ASSETS – 31 DECEMBER 2010 For personal use only LANE COVE $M CITYLINK HILLS M2 TOLLAUST M1 ED ROAM OTHER TOTAL TUNNEL Toll revenue 217.9 74.0 23.2 - 46.9 - 0.2 362.2 Fees and other revenue 20.4 0.9 0.5 4.5 0.1 8.0 1.3 35.7 Total revenue 238.3 74.9 23.7 4.5 47.0 8.
Slide 50: Result by Asset – Equity Assets December 2010
RESULT BY ASSET – 100% EQUITY ASSETS – 31 DECEMBER 2010 For personal use only M5 WESTLINK POCAHONTAS CAPITAL $M DRIVE TOTAL MOTORWAY M7 895 BELTWAY Toll revenue 85.1 96.8 7.6 - - 189.5 Fee and other revenue 5.7 1.4 - - - 7.1 Total revenue 90.8 98.2 7.6 - - 196.6 Total cost (13.7) (21.0) (2.9) - (2.9
Slide 51: Taxation
TAXATION For personal use only STATUTORY AND PROPORTIONAL 31 DEC 11 31 DEC 10 STATUTORY (TAX PAID) / REFUNDS RECEIVED INCLUDES $M $M Corporate 1.7 - M1 Eastern Distributor (38.7) (32.2) M4 (0.1) (0.6) Transurban US (0.6) - Westlink holding companies (1.0) (3.3) Total (38.7) (36.1) 31 DEC 11 31 DEC 1
Slide 52: Maintenance Expense
MAINTENANCE EXPENSE INCLUDED IN OPERATING COSTS For personal use only ADDITIONAL MAINTENANCE PROVISION RECOGNISED DURING THE YEAR 31 DEC 11 ($M) 31 DEC 10 ($M) CityLink 4.0 3.9 Hills M2 0.9 0.3 Lane Cove Tunnel 2.4 1.9 M1 Eastern Distributor 2.1 1.4 M5 – Interlink 1.2 1.2 M7 – Westlink 3.8 3.7 Pocah
Slide 53: Finance Costs – December 2010
FINANCE COSTS NET FINANCE COSTS PAID – 31 DECEMBER 2010 For personal use only NON-CASH ITEMS CONCESSION STATUTORY ACCRETION OF NET PROPORTIONAL DEBT FEE DISCOUNT AND OWNERSHIP NET FINANCE TIFIA, TLN & OTHER INTEREST NET INTEREST AMORTISATION MAINTENANCE COSTS USPP PAID PAID UNWIND Controlled entitie
Slide 54: Appendix – Detailed Treasury and Funding
For personal use only APPENDIX 2 – DETAILED TREASURY AND FUNDING
Slide 55: Group Drawn Debt at December 2011
GROUP DRAWN DEBT AT 31 DECEMBER 2011 For personal use only TRANSURBAN CORPORATE DEBT AUD ($M) USD ($M) Working capital lines1 117 53 Term bank debt 600 - US Private Placements 1,336 162 Domestic unwrapped bonds 450 - Domestic wrapped bonds 600 - Total 3,103 215 TRANSURBAN NON RECOURSE DEBT (AUD $ mi
Slide 56: Total Group Drawn Debt
TOTAL GROUP DRAWN DEBT For personal use only Group Debt 31 December 2011 30 June 2011 Movement Explanation3 AUD1 Repayment of remaining $203m unwrapped bonds on maturity in Corporate 3,103 3,177 (74) September offset by $117m increase in drawn working capital and $12m increase in 2006 USPP (accretin
Slide 57: Key Debt Metrics
KEY DEBT METRICS For personal use only 31 December 2011 30 June 2011 Transurban Transurban Corporate Non recourse Corporate Non recourse Group Group Weighted average maturity (years)1 9.5 yrs 5.4 yrs 12.5 yrs 8.9 yrs 5.3 yrs 11.8 yrs Weighted average cost of AUD debt 6.9% 6.9% 6.9% 7.0% 6.7% 7.3% We
Slide 58: Corporate Debt Maturities by Financial Year
CORPORATE DEBT MATURITIES BY FINANCIAL YEAR For personal use only As at 31 December 2011 1. Debt is shown in financial year in it matures. 2. Debt values are as at 31 December 2011. USD debt converted at the hedged rate where cross currency swaps are in place. Unhedged USD debt converted to AUD at s
Slide 59: Asset Debt Maturities by Financial Year
ASSET DEBT MATURITIES BY FINANCIAL YEAR For personal use only As at 31 December 2011 1. The full value of debt facilities is shown as this is the value of debt for refinancing purposes. This overstates Transurban’s ownership share of the debt. 2. Debt is shown in financial year in it matures. 3. USD
Slide 60: Appendix – Portfolio Summary
For personal use only APPENDIX 3 – PORTFOLIO SUMMARY
Slide 61: Asset Lifecycle
ASSET LIFECYCLE TRANSURBAN AUSTRALIAN PORTFOLIO – INDEXED GROWTH For personal use only • Asset growth will reflect catchment demographics and network improvements • Early stage assets well positioned for further growth Growth is indexed to Financial Year 1 AADT volumes (1.00) for each asset. 59
Slide 62: Melbourne
MELBOURNE For personal use only 2010/11 Population Melbourne1 4,161,197 * Growth Areas Authority 2011, State Government Victoria, viewed 15 July 2011, <http://www.gaa.vic.gov.au/index/> # Australian Pacific Airports (Melbourne) 2011, Australian Pacific Airports Melbourne, viewed 15 July 2011, <http:
Slide 63: Sydney
SYDNEY For personal use only 2010/11 Population Sydney1 4,643,274 * Roads and Traffic Authority 2011 (RTA), RTA NSW, viewed 15 July 2011, <http://www.rta.nsw.gov.au> 1. Access Economics 2011 61
Slide 64: Operating Asset Portfolio: Summary Statistics
OPERATING ASSET PORTFOLIO For personal use only SUMMARY STATISTICS M1 Eastern MOTORWAY M5 Hills M2 M7 Lane Cove Tunnel CityLink Pocahontas 895 Distributor OVERVIEW NSW NSW NSW NSW NSW VIC Virginia, USA Opening Date August 1992 May 1997 December 1999 December 2005 March 2007 December 2000 January 200
Slide 65: Tolling Escalation
TOLLING ESCALATION For personal use only EMBEDDED INFLATION PROTECTION MOTORWAY ESCALATION Escalated quarterly by quarterly CPI. The toll cannot be lowered as a result of deflation, however, until inflation counteracts the deflation M5* the toll cannot be increased. M2* Escalated quarterly by the gr
Slide 66: For personal use only
For personal use only > Click to edit Master text styles − Second level > Third level 64