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2 Disclaimer This publication is prepared by the Transurban Group comprising Transurban Holdings Limited (ACN ), Transurban Holding Trust (ARSN ) and Transurban International Limited (ACN ). The responsible entity of Transurban Holding Trust is Transurban Infrastructure Management Limited (ACN ) (AFSL ). No representation or warranty is made as to the accuracy, completeness or correctness of the information contained in this publication. To the maximum extent permitted by law, none of the Transurban Group, its Directors, employees or agents or any other person, accept any liability for any loss arising from or in connection with this publication including, without limitation, any liability arising from fault or negligence, or make any representations or warranties regarding, and take no responsibility for, any part of this publication and make no representation or warranty, express or implied, as to the currency, accuracy, reliability, or completeness of information in this publication. The information in this publication does not take into account individual investment and financial circumstances and is not intended in any way to influence a person dealing with a financial product, nor provide financial advice. It does not constitute an offer to subscribe for securities in the Transurban Group. Any person intending to deal in Transurban Group securities is recommended to obtain professional advice. UNITED STATES These materials do not constitute an offer of securities for sale in the United States, and the securities referred to in these materials have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. Copyright Transurban Limited ABN All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written permission of the Transurban Group. 2

3 Snapshot Transurban is Australia s largest privately owned toll road operator Ownership interests in 15 toll road assets (13 Australia, 2 US) 1 Urban toll road networks in areas of congested traffic Demonstrated strong and resilient traffic volumes over time Long-term concessions Weighted-average length of c years Embedded inflation protection for Australian assets Ranked 13 th on the ASX, with a market capitalisation of A$24.3 billion as at 30 June 2017 LONG-LIFE TOLL ROAD NETWORKS ESSENTIAL URBAN INFRASTRUCTURE EMBEDDED INFLATION PROTECTION FOR AUSTRALIAN ASSETS COMMITTED TO STRONG INVESTMENT GRADE CREDIT METRICS 1. Operates 15 toll roads under 14 concession agreements Gateway and Logan toll roads in Queensland operate under a single concession. 3

4 Strategy To be the partner of choice with governments providing effective and innovative urban road infrastructure and services utilising core capabilities Network planning / forecasting Community engagement Development / delivery Technology Operations Customer management 4

5 Multi-layered business CORE BUSINESS Four urban networks Inflation linked revenue Traffic growth through economic cycles Focus on organisational culture and people OPERATIONAL EXCELLENCE Technology application on assets Organisational capability Data analytics Continuous investment Eight projects with multiple government partners $9 billion 1,2 development pipeline Additional 288 lane kilometres DEVELOPMENT CAV application Policy reform Integrated data Technology partnerships FUTURE POSITIONING 1. Estimated spend reflects 100% of the total project cost not Transurban s share. 2. As the 95 Express Lanes Fredericksburg Extension Project is in early negotiations, this project has not been included in Transurban s $9 billion development pipeline. 5

6 Transurban operates in a regulated environment Concession deeds Independent regulation Light handed monitoring Example industries Toll roads Utilities including electricity, water, gas Airports, railway and some ports Pricing freedoms Australian tolls fixed from date of concession with defined escalation. Other charges are set out in concession deeds, legislation or agreed with client (cost recovery) Prices reset periodically (around every five years) to allow agreed return hurdles to be met based upon a regulated asset base Price monitoring by the ACCC. Commercial arrangements with users renegotiated periodically Customer choice Road users have alternatives including non-tolled roads and other modes of transport Choice at retailer level but monopolies around distribution infrastructure Limited alternatives for consumers and users (airlines, shipping lines) Volume risk Demand risk borne by toll road owner, including shortfalls in revenue or higher than anticipated costs Prices can be adjusted annually to allow costs to be covered and margin earned even if volumes fall Price reset is a commercial negotiation which covers cost recovery, volumes and returns 6

7 History CityLink M1-CityLink Upgrade CityLink Tulla Widening Hills M2 Hills M2 Upgrade M7 ED & M5 1 M5 Widening Lane Cove Tunnel Cross City Tunnel Gateway, Logan, Clem7 & Go Between Bridge 2 Legacy Way 2 AirportlinkM7 495 Express Lanes 95 Express Lanes Transurban D&C projects shown from road opening date Acquired Upgrade project 1. Acquired as part of takeover bid of Sydney Roads Group. 2. Acquisition of Queensland Motorways. 7

8 Network overview

9 Sydney network INTEGRAL PART OF SYDNEY S ORBITAL RING ROAD Overview / highlights Six toll roads representing 40% of proportional toll revenue M2, LCT and CCT are wholly owned ED, M7 and M5 are partially owned alongside partners Remaining concession lives range from 9 to 31 years NorthConnex (50% owned by Transurban) currently under construction HISTORICAL DATA FY15 FY16 FY17 CAGR (%) Traffic (ADT) Proportional toll revenue 2 A$m Proportional EBITDA A$m EBITDA margin 3 % n/a KEY STATISTICS Sydney population (2016) 4 5.0m Population growth ( ) 4 1.7% Gross State Product growth ( ) 5 2.2% Number of vehicles (2017) 6 5.5m Gross State Product by Sector (FY16) 14% 33% 11% 8% 5% 5% 6% Financial services Professional services Health care Education and training Wholesale trade 6% 7% 6% Real estate investment Manufacturing Construction Retail trade Other 1. Average Daily Trips are calculated by dividing the total number of trips on each toll road by the number of days in the period. A trip represents a vehicle passing through a designated toll point on the relevant toll road, with the exception of Westlink M7 where one trip represents a vehicle passing under two toll points on the relevant toll road. 2. Toll revenue includes service and fee revenue. 3. EBITDA margins are calculated using toll revenue including service and fee revenue. 4. Australian Bureau of Statistics, catalogue 3218 Regional Population Growth, June Australian Bureau of Statistics, catalogue 5220 Australian National Accounts: State Accounts, Australian Bureau of Statistics, catalogue 9309 Motor Vehicle Census, January

10 Melbourne network MELBOURNE S CRITICAL URBAN TOLL ROAD Overview / highlights Transurban s largest single asset, 32% of toll proportional revenue Part of Melbourne s most important traffic corridor Operational since 1999 with the concession to % owned by Transurban with no external asset level debt Proposal for West Gate Tunnel Project in Stage Four of the five stage market-led proposal process with State Government HISTORICAL DATA FY15 FY16 FY17 CAGR (%) Traffic (ADT) Toll revenue 2 A$m EBITDA A$m EBITDA margin 3 % n/a KEY STATISTICS Melbourne population (2016) 4 4.6m Population growth ( ) 4 2.3% Gross State Product growth ( ) 5 2.2% Number of vehicles (2017) 6 4.8m Gross State Product by Sector (FY16) 12% 26% 10% 8% 5% 5% 8% 6% 7% 8% Financial services Real estate investment Professional services Manufacturing Health care Construction Education and training Retail trade Wholesale trade Other 1. Average Daily Transactions are calculated by dividing the total number of transactions on each toll road by the number of days in the period. 2. Toll revenue includes service and fee revenue. 3. EBITDA margins are calculated using toll revenue including service and fee revenue. 4. Australian Bureau of Statistics, catalogue 3218 Regional Population Growth, June Australian Bureau of Statistics, catalogue 5220 Australian National Accounts: State Accounts, Australian Bureau of Statistics, catalogue 9309 Motor Vehicle Census, January

11 Brisbane network HIGH QUALITY, STRATEGIC NETWORK Overview / highlights Six toll roads representing 18% of proportional toll revenue Transurban Queensland ownership: Transurban 62.5% AustralianSuper 25% Abu Dhabi Investment Authority 12.5% Concession lives range from 34 to 48 years Three projects under construction: Gateway Upgrade North Logan Enhancement Project Inner City Bypass upgrade HISTORICAL DATA FY15 FY16 FY17 CAGR (%) Traffic (ADT) Proportional toll revenue 2 A$m Underlying proportional EBITDA A$m EBITDA margin 3 % n/a KEY STATISTICS Brisbane population (2016) 4 2.3m Population growth ( ) 4 2.1% Gross State Product growth ( ) 5 2.9% Number of vehicles (2017) 6 3.9m Gross State Product by Sector (FY16) 11% 7% 34% 10% 8% 5% 7% 6% 6% 6% Financial services Real estate investment Professional services Manufacturing Health care Construction Education and training Retail trade Wholesale trade Other 1. Average Daily Trips are calculated by dividing the total number of trips on each toll road by the number of days in the period. A trip represents a vehicle passing through a designated toll point on the relevant toll road. 2. Toll revenue includes service and fee revenue. 3. EBITDA margins are calculated using toll revenue including service and fee revenue. 4. Australian Bureau of Statistics, catalogue 3218 Regional Population Growth, June Australian Bureau of Statistics, catalogue 5220 Australian National Accounts: State Accounts, Australian Bureau of Statistics, catalogue 9309 Motor Vehicle Census, January

12 Greater Washington area network STRATEGICALLY LOCATED ON CONGESTED CORRIDOR Overview / highlights Two roads representing 10% of proportional toll revenue 495 Express Lanes opened Nov Express Lanes opened Dec Express Lanes project reached financial close July 2017 All concessions to 2087 High occupancy toll (HOT) lanes Dynamic tolling (no contractual toll price limits) HISTORICAL DATA FY15 FY16 FY17 CAGR (%) Traffic (ADT) Proportional toll revenue 2 A$m Proportional EBITDA A$m EBITDA margin 3 % n/a 1. Average Daily Trips are calculated by dividing the total number of trips on each toll road by the number of days in the period. On the 495 Express Lanes and 95 Express Lanes, one trip represents a vehicle passing under two toll points on the relevant toll road. 2. Toll revenue includes service and fee revenue. 3. EBITDA margins are calculated using toll revenue including service and fee revenue. 4. United States Census Bureau. 5. Bureau of Economic Analysis. KEY STATISTICS 6. Virginia Department of Motor Vehicles. Population (2016) 4 8.4m Population growth ( ) 4 0.9% Gross State Product growth ( ) 5 2.7% Number of vehicles (2016) 6 8.1m Gross State Product by Sector (FY16) 4% 4% 5% 21% 5% 6% Government Professional services Health care Financial services Wholesale trade 9% 18% 13% 14% Real estate investment Manufacturing Retail trade Construction Other 12

13 Introduction to Express Lanes Transurban has an obligation to maintain a minimum speed on the Express Lanes which are located alongside general purpose lanes with no minimum speed Customers have the choice when approaching to choose to pay a toll or use the free general purpose lanes Tolls are updated as often as every 10 mins and are displayed to drivers before they reach the Express Lanes entry points As traffic increases, the toll price goes up to manage demand The 95 Express Lanes are fully reversible to accommodate morning and evening peaks Increasing traffic leads to higher toll prices to manage demand $0.55 $1.20 $2.85 Total toll price $4.60 Express Lanes General purpose lanes 13

14 Global congestion Congestion 1 (%) 80% Sydney 70% Brisbane 60% Melbourne Mexico City 50% Los Angeles Rome Sydney London 40% New York City 30% Melbourne Washington DC 20% Brisbane 10% 0% Population (millions) Transurban operates in some of the world s most congested cities Congestion is projected to continue increasing around the world making Transurban s services more valuable over time Estimate 1. TomTom Congestion Index estimates are Transurban estimates. 14

15 $9 billion development pipeline 1 FY18 FY19 FY20 FY21 FY22 COMMITTED PROJECTS UNDER CONSTRUCTION 2 CITYLINK TULLA WIDENING Melbourne ($1.0 billion) WEBB DOCK ACCESS 4 Melbourne 95 EXPRESS LANES SOUTHERN EXTENSION GWA (US$25 million) INNER CITY BYPASS Brisbane ($37.5 million) MONASH FREEWAY UPGRADE 4 Melbourne 3 LOGAN ENHANCEMENT PROJECT Brisbane ($320 million) 395 EXPRESS LANES GWA (US$475 million) NORTHCONNEX Sydney ($1.3 billion) EXCLUSIVE NEGOTIATIONS 2,3 WEST GATE TUNNEL PROJECT Melbourne ($3.5 - $4.0 billion) 4 95 EXPRESS LANES FREDERICKSBURG EXTENSION PROJECT 5 GWA TRANSURBAN ESTIMATED ANNUAL CAPITAL CONTRIBUTION 2,5 $1.8B $1.5B $1.3B $0.8B $0.3B 1. Estimated spend reflects 100% of the total project cost, not Transurban s share. 2. Estimated spend reflects Transurban s proportion of the total project cost, net of government contribution. 3. Final funding requirement subject to confirmation of project scope and/or competitive procurement process and extent of government funding. 4. West Gate Tunnel Project (formerly Western Distributor Project) cost to Transurban of $3.5 - $4.0 billion (inclusive of Webb Dock Access and Monash Freeway Upgrade). 5. The 95 Express Lanes Fredericksburg Extension Project has not been included in Transurban s estimated annual capital contribution as it is still in early negotiations. 15

16 Potential opportunities in government transport plans UNDER CONSTRUCTION/PROCUREMENT 2 FY17-FY19 FY20-FY22 FY23-FY25 FY26-FY28 FY29+ WESTCONNEX STAGE 1A Sydney WESTCONNEX STAGE 1B Sydney WESTCONNEX STAGE 2 Sydney SYDNEY GATEWAY Sydney WESTCONNEX STAGE 3 Sydney POTENTIAL NETWORK ENHANCEMENTS 2 CENTENARY/WESTERN MOTORWAY WIDENING 1 Brisbane M7 WIDENING 1 Sydney PACIFIC MOTORWAY WIDENING 1 Brisbane LOGAN MOTORWAY WIDENING 1 Brisbane PARADISE ROAD WIDENING 1 Brisbane MISSING LINKS 2 PARK RIDGE CONNECTOR 1 Brisbane WESTERN HARBOUR TUNNEL Sydney BEACHES LINK Sydney NORTH EAST LINK Melbourne F6 EXTENSION 1 Sydney INTEGRATED REGIONAL TRANSPORT CORRIDOR 1 Brisbane OUTER SYDNEY ORBITAL 1 Sydney OUTER MELBOURNE RING Melbourne 1. Timing estimated by Transurban. 2. Revenue sources, if any, are yet to be determined. Some government owned assets may include opportunities for operational and network enhancements which will not include tolls. 16

17 North American market opportunities Congestion level NETWORK POTENTIAL IN NORTH AMERICA S MOST CONGESTED CITIES 1 FAVOURABLE DEMOGRAPHICS GOVERNMENT READINESS/ WILLINGNESS FOR PPP 50% 40% Vancouver San Francisco Toronto Los Angeles TIME SAVINGS VALUE TO MOTORISTS NETWORK POTENTIAL 30% Seattle Orlando Miami Greater Washington Area Chicago 20% Denver Boston Houston Dallas-Fort Worth 10% Charlotte San Antonio Norfolk / VA Beach 1. Bubble size represents network potential. 0% Population (millions) Source: Tom Tom 2014 data 17

18 Disciplined approach to investment TRANSURBAN TRAFFIC FORECASTING CAPABILITY Vendor/third party forecast Actual Transurban Bid FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 INVESTMENT APPROACH Long-term owner-operator model aligned with government partners Pursue sustainable policy Internal due diligence capability traffic forecasting, operations, maintenance, construction and project valuation Construction risk management use of tier one contractors, fixed-price and fixed-time contracts, in-house project management Through-the-cycle approach to cost of capital Synergies from leveraging existing business Distribution impacts a key factor in decision making One-quarter of portfolio acquired out of receivership for ~50% of construction cost 18

19 A$ MILLION Balance sheet capacity to fund investments Earnings growth underpins balance sheet expansion Commitment to strong investment grade credit metrics Targeting strong investment grade credit metrics and minimum FFO to debt of 8% Incremental funding sources: Enhancing asset capital structures through development funding and capital release DRP delivered $120 million in FY17 Capacity to fund current development pipeline West Gate Tunnel Project is the only project in the current development pipeline potentially requiring additional equity funding BUSINESS GROWTH SUPPORTS GREATER INVESTMENT 1 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000-2H14 1H15 2H15 1H16 2H16 1H17 2H17 1. Represents Transurban s enterprise value, calculated as the sum of Transurban market capitalisation and proportional drawn debt at the end of each period. 19

20 Project funding sources Transurban has negotiated with government partners to fund its projects through a number of value sources Explanation Application Example Toll price escalation floors Increasing tolls at the maximum of CPI and a predetermined annual growth rate A minimum escalation of 1% per annum for heavy vehicle tolls was implemented on LCT to help fund the M2 Integration Project Heavy vehicle multipliers Heavy vehicles are tolled at a multiple of cars increasing this multiple assists in paying for the travel time benefits received HCV tolls on Gateway and Logan motorways are progressively increasing to 3.46 times cars to fund the Logan Enhancement Project Concession extensions on existing assets The net present value of the additional years cash flow in exchange for funding upgrades, developments and acquisitions The CityLink concession was extended for one year to help fund the CityLink Tulla Widening project 20

21 Financial overview

22 Capital management strategy Consistently growing distributions Efficiently fund growth Maintain strong investment grade credit metrics Cost efficient funding through market cycles 22

23 Distribution growth Consistent growth in earnings driven by four key factors Traffic historically, mature toll roads have delivered on average 2-4% annual traffic growth Prices defined escalation set by the relevant concession agreements Operational margin improvement from operational efficiencies Development contribution from pipeline of new assets Compound annual growth of greater than 10% since FY09 (incl. FY18 guidance) ACTUAL GUIDANCE FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 $281M $324M $389M $429M $456M $594M $764M $901M $1,055M AMOUNT DISTRIBUTED 1 1. Total amount distributed inclusive of DRP. 23

24 A$ MILLION Hedged against rising interest rates and protected against low inflation TRANSURBAN INTEREST RATE HEDGING PROFILE 1 INFLATION-LINKED TOLL PRICING, WITH UPSIDE 4,5 18,000 16,000 14,000 GWA Sydney Brisbane Corporate Fixed amount 99.4% interest rate hedged at 30 June % 9% CPI or greater No CPI floor Dynamic 12,000 Hedge tenor is matched to the tenor of the debt on 97% 2 of drawn debt 10,000 Currently 100% currency hedged 3 8,000 6,000 81% 4,000 2,000 0 FY17 FY19 FY21 FY23 FY25 FY27 FY29 FY31 FY33 FY35 FY37 FY39 FY41 FY43 FY45 FY47 1. Calculated on the full value of drawn debt including 100% of non-recourse drawn debt. Non-AUD debt is converted at the hedged rate where cross currency swaps are in place. USD debt is converted at the spot exchange rate ($ at 30 June 2017) where no cross currency swaps are in place. 2. $33 million of drawn corporate working capital maturing June 2019 is unhedged. Transurban Queensland has $77 million drawn under the capital expenditure facilities, maturing in December $310 million PABs for 495 Express Lanes maturing in FY48 are hedged to FY28. $15.5 million of M7 debt is unhedged between December 2017 and August 2019, with $22 million unhedged from August 2019 to August A total of US$992 million corporate debt is not swapped to AUD, this debt forms part of the Group s net investment hedge relating to US entities. 4. Revenue based on proportionate toll revenue as disclosed in the FY17 Results Presentation. 5. Note each asset is subject to specific CPI conditions in the context of toll price adjustments. 24

25 Capital snapshot CREDIT METRICS (30 JUN 2017) Weighted average maturity 1,2 9.0 years Weighted average cost of AUD debt 1,3 4.9% Weighted average cost of USD debt 3 4.3% Gearing (proportional debt to enterprise value) 1,4 35.3% FFO/Debt 5 8.6% CORPORATE CREDIT RATINGS S&P Moody s Fitch BBB+ (stable) Baa1 (stable) A- (stable) 1. CAD, CHF, EUR, NOK and USD debt converted at the hedged rate where cross currency swaps are in place. USD debt is converted at the spot exchange rate ($ at 30 June 2017) where no cross currency swaps are in place. 2. Full value of drawn debt. 3. Proportional drawn debt exclusive of issued letters of credit. 4. Proportional debt to enterprise value, exclusive of issued letters of credit. Security price was $11.85 with 2,052 million securities on issue at 30 June Based on S&P methodology. 25

26 Corporate debt maturities at 30 June 2017 A$ MILLION 2,000 Working capital facilities USPP AMTN EMTN 144A Letters of credit 1,800 1,600 1,400 1,200 1, Debt is shown in the financial year in which it matures. 2. Debt values are in AUD as at 30 June CAD, EUR, NOK and USD debt converted at the hedged rate where cross currency swaps are in place. USD debt is converted at the spot exchange rate ($ at 30 June 2017) where no cross currency swaps are in place. 3. Corporate working capital shown at final maturity dates. All working capital facilities were refinanced in July

27 Non-recourse debt maturities at 30 June 2017 A$ MILLION 2,200 TQ (incl ALM7) ED M2 M7 CCT M5 LCT ,000 1,800 1,600 1, ,200 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 the financial year in which it matures. 3. Debt values are in AUD as at 30 June CHF and USD debt converted at the hedged rate where cross currency swaps are in place. USD debt is converted at the spot exchange rate ($ at 30 June 2017) where no cross currency swaps are in place. 4. The A$292 million maturing in FY21 are part of the 495 Express Lanes senior bonds maturing in FY48. This tranche will be refinanced as per the financing structure agreed with the sole holder, J.P. Morgan Express Lanes and 495 Express Lanes maturities show final maturity dates. 27

28 Positioning for the future

29 Significant opportunities emerging through technology Tolling and back office services Efficient road network operations CAV technology advancement Expanded customer interfaces 29

30 BENEFITS Network management opportunities Now Medium term Long term ROADSIDE MEASURES SHIFT TO SMART VEHICLES DRIVERLESS VEHICLES Variable speed signs Lane use management Over height detection Weight-in-motion sensors Internet-connected vehicles Accurate vehicle tracking Real-time communication with drivers Driverless vehicles communicating with centralised systems Effective traffic control Reduced damage to infrastructure Improved road safety New road user pricing models Improved traffic management Richer data and analytics Integrated road user experience Increased utilisation of road assets Optimisation of traffic flows Resulting in increased network capacity and more efficient travel times 30

31 Technology initiatives Using technology to deliver an improved customer experience Digital: Smartphone apps available for CityLink and Transurban Linkt; go via expected mid 2018 Future ready: Consumer trial for mobile GPS tolling app underway in NSW; market release expected late 2017 GPS tolling trials underway with large commercial customers, leveraging invehicle telematics units CAV TRIALS CityLink CAV trails commenced August 2017 Researching how vehicles with partial automation features interact with motorway infrastructure Testing infrastructure, regulation and community preparedness for introduction of CAVs Exploring consumer attitudes, behaviours and concerns New CAV trials to begin on 95 and 495 Express Lanes in mid

32 Preparing for technology advances Technology advances impacting capacity: Connected and automated vehicles (CAVs) Vehicle platooning Designated lanes Potential for 10-25% increase in motorway capacity by 2030s Safety benefits from reduced human error Vehicle platooning Dedicated lanes for CAVs Potential to double capacity in dedicated CAV lanes 32

33 Customer base Transurban has an Australian customer base of over 3 million customers and a US 1 customer base of 3.5 million customers Account holders Non-account holders 95% of customer base Service requirements differ by customer: Retail customers (70%) apps, self service options, travel time savings Corporate customers (30%) travel time savings, performance reporting, partnerships 5% of customer base Improving customer experience for non-account holders First time fee waiver program Campaigns to convert non-account customers Proactive outbound communications to customers 1. US Customer Base based on cumulative unique transponders used on the assets. 33

34 Commitment to sustainability RECOGNITION OF TRANSURBAN S APPROACH Dow Jones Sustainability Index (DJSI): Recognised in DJSI World Leadership Index DJSI Asia Pacific Leadership Index recognition for the 11th year Awarded DJSI Industry Mover Sustainability Award 2017 (Transport Infrastructure sector) FTSE4Good Index member for the 13th year ACSI rated as Leading for sustainability reporting for the ninth year Awarded WGEA Employer of Choice for Gender Equality for the third year Equileap Diversity Award top 20 company globally for gender equality one of six reporting zero pay gap 1 CTW and GUN projects have each received an Excellent rating from ISCA SUSTAINABILITY INITIATIVES Launched second Reconciliation Action Plan Innovate RAP Investigate transport mobility challenges faced by Aboriginal and Torres Strait Islander communities Engage employees in cultural learning opportunities Mentoring relationships and supporting continuing education Upcoming third and fourth stages Stretch and Elevate Transurban awards innovation grants to assist in the development of new road and safety initiatives. In FY17, grants were awarded to: Deakin University barrier overlay to reduce risks to motorcyclists Imagine IM graphene-based smart sensors University of Melbourne intelligent speed-sensing pavement-integrated LEDs 1. Zero pay gap defined as 3%. Transurban s objective is a zero pay gap. 34

35 Summary Stable distributions tied to inflation Diversified portfolio of urban road assets average concession life 29.7 years Delivering an improved customer experience through digital channels and proactive engagement Continued investment into technology smartphone apps, GPS tolling, CAV trials Balance sheet positioned to fund $9 billion development pipeline Globally recognised commitment to sustainability 35

36 Appendix

37 Toll road operations BUILD Opportunity for development identified or Government initiates a tender process for a particular project Proposal developed considering geography, feasibility, community engagement, technical issues, cost and potential funding sources Proposal submitted to government and details negotiated If accepted, Transurban appoints a D&C contractor to construct the asset Upon completion, Transurban takes delivery of the road and commences operations OPERATE Roadside services data capture: Identifies the vehicle/etag Records characteristics of the trip Transfers trip data for processing GLIDe (back office services) Trip construction, pricing and licence plate detection Toll collection and enforcement processing Customer account, tag and payment management MAINTAIN Concession deeds state that Transurban must maintain the asset Maintenance is recurring and nonrecurring, generally cyclical, depending on wear and tear Annual recurring maintenance includes: line marking, road sweeping. Expensed directly to P&L Non-recurring (major) maintenance includes: surface re-sheeting, structural works. Maintenance provision raised and expensed to P&L Provision raised to reflect the level of wear and tear on the road at a given point in time 37

38 Summarised group structure Not consolidated Equity accounted 100% owned Consolidated Transurban Group (TCL) is a stapled security which comprises one share in THL, one unit in THT and one share in TIL. The individual securities within each stapled security cannot be traded separately TRANSURBAN HOLDINGS LIMITED TRANSURBAN HOLDING TRUST TRANSURBAN INTERNATIONAL LIMITED CORPORATE ENTITIES ROAD/OPERATING ENTITIES OTHER ENTITIES ROAD/OPERATING ENTITIES CORPORATE ENTITIES Including: Employing entity Financing entity Trustee entities Companies operating and maintaining roads Trusts holding asset and financing Corporate financing entity Companies operating and maintaining roads CityLink Melbourne Limited CityLink Trust Transurban Finance Trust Capital Beltway Express LLC (495) Hills Motorway Limited (M2) Hills Motorway Trust (M2) Holding company Transurban DRIVe Holdings LLC LCT MRE Pty Limited (LCT) LCT MRE Trust (LCT) 95 Express Lanes LLC Transurban CCT Pty Limited (CCT) Transurban CCT Trust (CCT) US employing entity 75.1% Airport Motorway Limited (ED) Airport Motorway Trust (ED) 62.5% Transurban Queensland Holdings 1 Pty Ltd Transurban Queensland Invest Trust Transurban Queensland Holdings 2 Pty Ltd 50.0% NorthWestern Roads Group Pty Limited (M7, NCX) NorthWestern Roads Group Trust (M7, NCX) 50.0% Interlink Roads Pty Limited (M5) Builds, operates and maintains road, and has own borrowings. Funding from nonrecourse borrowings. 38

39 Funding structure at 30 June 2017 Transurban 3 BBB+/Baa1/A- Non- Recourse Corporate Sydney Brisbane GWA M2 LCT CCT ED 3 M7 3 M5 3 TQ 3 Airportlink M7 495 Express Lanes 95 Express Lanes 3,4 -/A3/A- -/A3/A- -/A2/- BBB/-/- BBB-/-/BBB- AMTN A$0.3B EMTN 1.6B Working capital 2 A$0.9B A$0.8B Term debt A$0.2B A$0.3B AMTN A$0.3B AMTN A$1.0B A$0.7B AMTN A$0.7B A$1.0B PABs US$0.2B PABs US$0.2B Maple C$0.3B A$0.2B A$0.2B A$0.6B USPP US$1.1B A$0.3B TIFIA US$0.8B TIFIA US$0.3B NOK NOK0.8B Bank debt 1 Capital markets debt 1 Government debt 1 AUD PP A$0.2B EMTN CHF0.4B USPP US$0.8B A$0.1B 144A US$1.1B 1. Debt facilities including undrawn available facilities, in the base currency of debt before hedging. 2. Corporate working capital facilities are bilateral facilities and can be drawn in AUD and/or USD. 3. Ratings are presented as S&P/Moody s/fitch. Where debt is not rated by that particular agency, this is denoted as Ratings for S&P and Fitch were upgraded to BBB in July A$0.8B 39

40 Asset portfolio at 30 June 2017 MELBOURNE SYDNEY OVERVIEW CITYLINK M5 M2 ED M7 NCX LCT CCT Opening date Dec 2000 Aug 1992 May 1997 Dec 1999 Dec 2005 Under construction Mar 2007 Aug 2005 Remaining concession period 18 years 9 years 31 years 31 years 31 years 28 years 1 31 years 18 years Concession end date Jan 2035 Dec 2026 Jun 2048 Jul 2048 Jun 2048 Jun 2048 Jun 2048 Dec 2035 PHYSICAL DETAILS Length total 22 km in 2 sections 22 km 21 km 6 km 40 km 9 km 3.8 km 2.1 km Length surface 16.8 km 22 km 20.4 km 4.3 km 40 km 0.3 km Length tunnel 5.2 km 0.6 km 1.7 km 9 km 3.5 km 2.1 km Lanes 2x4 in most sections 2x3 2x3 OWNERSHIP 2x3 2x2 some sections 2x2 2x2 2x2 2x3 some sections 2x2 2x3 some ramp sections Transurban ownership 100% 50% 100% 75.1% 50% 50% 100% 100% TOLLING Large vehicle multiplier LCV: 1.6x HCV: 3x (day) 2x (night) 3x 3x 2x 3x 3x 3x 2x 1. Concession period from expected opening date in late

41 Asset portfolio at 30 June 2017 BRISBANE GREATER WASHINGTON AREA OVERVIEW GATEWAY MOTORWAY LOGAN MOTORWAY CLEM7 GO BETWEEN BRIDGE LEGACY WAY AIRPORTLINK M7 495 EXPRESS LANES 95 EXPRESS LANES Opening date Dec 1986 Dec 1988 Mar 2010 Jul 2010 Jun 2015 Jul 2012 Nov 2012 Dec EXPRESS LANES Under construction Remaining concession period 35 years 35 years 34 years 46 years 48 years 36 years 70 years 70 years 68 years 4 Concession end date Dec 2051 Dec 2051 Aug 2051 Dec 2063 Jun 2065 Jun 2053 Dec 2087 Dec 2087 Dec 2087 PHYSICAL DETAILS Length total 23.1 km km 6.8 km 0.3 km 5.7 km 6.7 km 22 km 46.6 km 13 km Length surface 23.1 km km 2.0 km 0.3 km 1.1 km 1.0 km 22 km 46.6 km 13 km Length tunnel 4.8 km 4.6 km 5.7 km Lanes 6,8 and 10 (various) 12 Gateway Bridge OWNERSHIP 2x2 2x2 2x2 2x2 2x3 2x2 HOT lanes 2 and 3 reversible HOT lanes Transurban ownership 62.5% 62.5% 62.5% 62.5% 62.5% 62.5% 100% 100% 100% TOLLING Large vehicle multiplier LCV 1.5x LCV 1.5x LCV 1.5x LCV 1.5x LCV 1.5x LCV 1.5x HCV 2.65x 2 HCV 2.65x 2 HCV 2.65x 3 HCV 2.65x 3 HCV 2.65x 3 HCV 2.65x No multiplier trucks >2 axles not permitted No multiplier trucks >2 axles not permitted 3 reversible HOT lanes No multiplier trucks >2 axles not permitted 1. Length includes 9.8 km of Gateway Extension Motorway. 2. Logan and Gateway HCV tolls progressively moving up to 3.46 times cars post LEP (completion expected mid-2019). 3. HCV multiplier moving to 3 times cars on 1 July 2018 for Clem7 and Go Between Bridge, and 1 July 2020 for Legacy Way, subject to State Government approval. 4. Concession period from expected opening date in late

42 Tolling escalation EMBEDDED INFLATION PROTECTION MOTORWAY CityLink ESCALATION Escalated quarterly by the greater of quarterly CPI or % per quarter for the first 16 years (until 31 December 2016), 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 greater of quarterly CPI or 1%. LCT Escalated quarterly by quarterly CPI. The toll cannot be lowered as a result of deflation, however, until inflation counteracts the deflation the toll cannot be increased. ED Escalated quarterly by the greater of a weighted sum of quarterly AWE and quarterly CPI or 1%. M7 M5 Escalated or de-escalated quarterly by quarterly CPI. Escalated quarterly by quarterly Sydney CPI. The toll cannot be lowered as a result of deflation, however, until inflation counteracts the deflation the toll cannot be increased. CCT Escalated quarterly by: the greater of quarterly CPI or % (equivalent to 4% per annum) to June 2012; the greater of quarterly CPI or % (equivalent to 3% per annum) to June 2018; quarterly CPI to concession end. Logan Motorway Gateway Motorway Clem7 Go Between Bridge Legacy Way AirportlinkM7 495 Express Lanes Dynamic, uncapped. 95 Express Lanes Dynamic, uncapped. Tolls escalate annually at Brisbane CPI. The toll cannot be lowered as a result of deflation. Tolls escalate annually at Brisbane CPI. The toll cannot be lowered as a result of deflation. Tolls escalate annually at Brisbane CPI. The toll cannot be lowered as a result of deflation. Tolls escalate annually at Brisbane CPI. The toll cannot be lowered as a result of deflation. Tolls escalate annually at Brisbane CPI. The toll cannot be lowered as a result of deflation. Tolls escalate annually at Brisbane CPI. The toll cannot be lowered as a result of deflation. 42

43 Traffic mix PROPORTION OF VEHICLE CLASS BY ADT 1 100% Large Vehicles Cars 50% 0% M2 LCT CCT ED M7 M5 CityLink Gateway Logan ALM7 Clem7 Legacy Way GBB 1. March quarter

44 Construction revenue and costs DEFINITION RECOGNITION Revenue for/costs relating to the construction of service concession assets The construction of service concession assets is managed by Transurban, however the Group does not own the assets (as they must be handed over to the Government in future) Instead, Transurban receives the right to collect revenue from the operation of the asset. This is why the motorways are recognised as intangible assets and not property, plant and equipment Whilst in progress: percentage of completion method (costs incurred to date as a percentage of total forecast costs for each project) The amount recognised each year is dependant on the number of development projects being undertaken Construction revenue and costs recognised at $0 margin (offset on P&L) 44

45 Intangible assets Transurban s operating assets are primarily long-life intangible assets (concession assets), as well as assets under construction and goodwill resulting from business combinations. Concession assets: Represent the Group s right to operate roads under Concession agreements. Valued at: Construction value Purchase price (concessions purchased as an asset acquisition) Fair value (concessions purchased as part of a business combination, such as Transurban Queensland) Amortised on a straight line basis over the term of the concession agreement. Assets under construction: The costs of construction or upgrade works that are not yet complete Excludes construction of NorthConnex which is accounted for in equity accounted investments. INTANGIBLE ASSETS 1 Accumulated amortisation CONCESSION ASSETS 2016 ($M) ASSETS UNDER CONSTRUCTION GOODWILL TOTAL Cost 22, ,544 Net book amount Accumulated amortisation (4,285) - - (4,285) 18, ,259 CONCESSION ASSETS 2017 ($M) ASSETS UNDER CONSTRUCTION GOODWILL TOTAL Cost 22,639 1, ,176 Net book amount (4,846) - - (4,846) 17,793 1, , Extract from 30 June 2017 financial statements note B16. 45

46 Maintenance provision Maintenance provision represents the discounted estimated cost of maintaining and repairing the concession assets representing one full cycle of each assets replacement Concession deeds state that the roads are to be maintained to an acceptable standard and must be in the condition set out in the deed on handback Estimated cost is recorded at present value, based on engineer s assessment of required future works Additions to provision each year based on annual assessment and wear and tear on the roadway Maintenance of the assets operates in cycles, with the maintenance provision only representative of the current cycle Cycle 1 Cycle 2 Year 0 Year 5 Year 10 Provision build up Cash outflow P&L expense MAINTENANCE PROVISION 1 Total provision $994m at 30 June 2017 Recurring (regular) maintenance costs expensed to the P&L during the year including O&M management and costs such as land care management, wall washing and inspections Unwinding of discount relates to net present value calculation. Shown as a finance cost in the P&L CURRENT $M NON-CURRENT $M Carrying value at 1 July Additional provision recognised 97 - Acquisition of subsidiary 4 20 Amounts paid/utilised (50) - Unwinding of discount - 41 Transfer (42) 42 Movement in foreign exchange 3 - Carrying value at 30 June Additional provision recognised Amounts paid/utilised (78) - Unwinding of discount - 38 Transfer (21) 21 Movement in foreign exchange 1 - Carrying value at 30 June Extract from 30 June 2017 financial statements note B17. 46

47 Shareholder loan notes Shareholder loan notes (SLN) are used by Transurban as a form of investor funding The Group has notes in relation to: North Western Roads Group (NWRG) and Transurban Queensland (TQ) NWRG SHAREHOLDER LOAN NOTES The NWRG issues SLNs to Transurban and other consortium partners to facilitate funding of the NorthConnex project. Funds provided by Transurban are receivable from the NWRG once NorthConnex operations commence The SLNs earn interest at a fixed rate until the final day of the NorthConnex concession period. The SLNs are classified as a held-to-maturity receivable on the Transurban Group balance sheet NWRG is an equity accounted investment NON-CURRENT ASSETS 1 Non-current assets Note 30 JUN 2016 ($M) 30 JUN 2017 ($M) Equity accounted investments B Held-to-maturity investments B Derivative financial instruments B Property, plant and equipment Deferred tax assets B7 1,097 1,061 Intangible assets B16 19,259 19,330 Total non-current assets 22,085 22, Extract from 30 June 2017 financial statements consolidated balance sheet. 47

48 Free cash calculation FREE CASH CALCULATION Cash flows from operating activities (refer Group Statutory accounts) Add back transaction and integration costs related to acquisitions (non-100% owned entities) Add back payments for maintenance of intangible assets Less cash flow from operating activities from consolidated non-100% owned entities Less allowance for maintenance of intangible assets for 100% owned assets SOURCE OF INFORMATION/EXPLANATION Statutory Transurban Holdings Limited operating cash flow (includes cash inflow from M5 TLNs). Transaction and integration related cash payments incurred on the acquisition of AirportlinkM7 in pcp. For statutory purposes payments for maintenance are classified as operating activities. For the calculation of free cash Transurban removes these payments and replaces them with increases or decreases to the maintenance provision recognised in the Statement of Comprehensive Income. This provides a smoother representation of maintenance spend and reflects the incurrence of damage through the facilities use. 100% of the operating cash flows of ED and TQ are included in the statutory results, however the distribution received by Transurban from these entities better reflects the cash available for distribution to Transurban security holders. The cash flows from operating activities are therefore eliminated and, where applicable, replaced with distributions received. Expenditure for maintenance of intangible assets is provided for over the period of the facilities use. The annual charge to recognise this provision reflects the yearly damage to the facility requiring maintenance. Also includes allowance for expenditure on electronic tags within 100% owned tolling businesses. Adjust for distributions and interest received from non-100% owned entities ED distribution M5 distribution and TLN interest TQ distribution and shareholder loan note (SLN) interest NWRG distribution Free cash Cash distribution received from ED by Transurban. Cash distribution received from M5 by Transurban and interest received on Transurban's long term loan to M5 (represents a portion of Transurban's ownership interest). Cash distribution received from TQ by Transurban and interest received on Transurban s long term loan to TQ (represents a portion of Transurban s ownership interest). Cash distributions received from the NWRG by Transurban. 48

49 Free cash flow RECONCILIATION OF STATUTORY CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FY16 ($M) FY17 ($M) FREE CASH FLOW FY16 FY17 % CHANGE Cash flows from operating activities Add back transaction and integration costs related to acquisitions (non-100% owned entities) Add back payments for maintenance of intangible assets Less cash flow from operating activities from consolidated non-100% owned entities 1 (284) (312) Less allowance for maintenance of intangible assets for 100% owned assets (60) (61) Free cash $926M $1,220M 31.7% Weighted average securities eligible for distribution 2 1,978M 2,048M 3.5% Free cash per security 46.8cps 59.6cps 27.4% Adjust for distributions and interest received from non-100% owned entities ED distribution M5 distribution and TLN interest TQ distribution and SLN interest NWRG distribution Free cash 926 1, Consolidated cash flows from non-100% owned entities includes ED and TQ. 2. Weighted average calculation based on entitlement to distribution. 49

50 Tax The majority of Transurban s Australian concessions are held via a company and a trust Transurban has six major tax consolidated groups. These tax groups are shown on slide 49 TRANSURBAN HOLDINGS LIMITED THL is liable to pay income tax Significant upfront capital expenditure is required to construct or acquire assets. Concession assets are amortised for tax purposes on a straight line basis over 40 years The amortisation of this capital expenditure can create initial tax losses, offsetting profits derived from more mature projects Income tax is paid after all eligible tax losses have been utilised to offset accumulated tax profits Losses prevent the payment of dividends in the early years of a project s life Tolling income is generated by the companies which hold the concession assets Transurban continues to invest significant amounts of capital into the road networks in which it operates TRANSURBAN HOLDING TRUST THT operates as a flow-through trust and does not pay income tax itself Sub-trusts pay distributions to THT which then distributes to investors Investors pay tax on distributions from THT based on their respective tax rates Trusts allow distributions to be made at the beginning of a project s life Transurban s trust entities earn passive income (e.g. rental income from leasing land) TRANSURBAN INTERNATIONAL LIMITED TIL is liable to pay tax in Australia TIL is an Australian entity which holds Transurban s US businesses Interest income is treated as assessable income. It is reduced by available Australian debt deductions Dividends received from US Groups are generally tax exempt in Australia 50

51 Tax groups TCL SECURITY HOLDERS FRANKED DIVIDENDS THL TRUST DISTRIBUTIONS THT TIL THL TAX GROUP CityLink Melbourne Ltd Hills Motorway Ltd LCT MRE Pty Ltd TRUST DISTRIBUTIONS CityLink Trust Hills Motorway Trust LCT Trust FRANKED DIVIDENDS Interlink Roads Pty Limited M5 (50%) INTEREST ON LOAN NOTES Transurban Queensland Holdings Pty Ltd TQ (62.5%) TRUST DISTRIBUTIONS Transurban Queensland Invest Trust NorthWestern Roads Group Pty Ltd NWRG (50%) INTEREST ON SLNs NorthWestern Roads Group Trust Airport Motorway Limited TRUST DISTRIBUTIONS Airport Motorway Trust M1 EASTERN DISTRIBUTOR (75.1%) DIVIDENDS DRIVe US TAX Group TUSA US TAX Group CCT Pty Ltd CCT Trust 495 (100%) Citylink CCT (100%) M2 LCT 95 (100%) 51

52 Reconciliation of income tax expense (benefit) RECONCILIATION OF INCOME TAX EXPENSE/ (BENEFIT) TO PRIMA FACIE TAX PAYABLE 1 FY16 ($M) FY17 ($M) (Loss)/profit before income tax expense (benefit) (47) 174 Tax at the Australian tax rate of 30.0% (2016: 30.0%) (14) 52 Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: Trust income not subject to tax (52) (61) Equity accounted results (5) (7) Tax rate differential (9) (3) Non-deductible interest Non-deductible depreciation (15) (12) Prior year tax losses recognised (23) (16) Sundry items 3 (4) Under/(over) provision in prior years 25 3 Income tax expense/(benefit) (69) (35) Trust income/losses not included in tax payable calculation Equity accounted results relate to profit from investments in M5 and M7 Tax rate differential: Relates to US tax rate of 39% applicable to US entities Tax expense/(income) relating to items of other comprehensive income Cash flow hedges (56) Extract from 30 June 2017 financial statements note B7. 52

53 Glossary

54 Glossary TERM ACCC ACSI ADT ALM7 AMTN ASX AUD AWE CAD CAV CCT CHF CPI CTW D&C DJSI DRIVe DRP EBITDA ED EMTN EUR FFO FREE CASH DEFINITION Australian Competition and Consumer Commission Australian Council of Superannuation Investors 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 AirportlinkM7 Australian Medium Term Note Australian Securities Exchange Australian Dollars Average Weekly Earnings Canadian Dollars Connected and Automated Vehicles Cross City Tunnel Swiss Franc Consumer Price Index. Refers to Australian CPI unless otherwise stated CityLink Tulla Widening Design and Construct Dow Jones Sustainability Index Direct Road Investment Vehicle. Transurban entity that holds an interest in the 495 and 95 Express Lanes Distribution Reinvestment Plan Earnings Before Interest, Tax, Depreciation and Amortisation Eastern Distributor Euro Medium Term Note Euros Funds From Operations Free cash is calculated as statutory cash flows from operating activities from 100% owned subsidiaries plus distributions and interest received from non-100% owned subsidiaries, adjusted to include the allowance for maintenance of intangible assets and excludes cash payments for maintenance of intangible assets 54

55 Glossary TERM FTSE FY GLIDe GPS GUN GWA HCV HOT ISCA LARGE VEHICLE LCT LCV LED M2 M5 M7 NCX NOK NSW NWRG O&M PAB DEFINITION Financial Times Stock Exchange Financial year 1 July to 30 June Tolling back office system Global Positioning System Gateway Upgrade North Greater Washington Area Heavy Commercial Vehicle High Occupancy Toll Infrastructure Sustainability Council of Australia Refers collectively to light commercial vehicles and heavy commercial vehicles Lane Cove Tunnel Light Commercial Vehicle Light Emitting Diode Hills M2 M5 South West Motorway Westlink M7 NorthConnex Norwegian Krone New South Wales NorthWestern Roads Group Operations and Maintenance Private Activity Bond 55

56 Glossary TERM PCP PP PROP/PROPORTIONAL RESULTS S&P SLN TCL THL THT TIFIA TIL DEFINITION Prior Corresponding Period Private Placement The proportional results are the aggregation of the results from each asset multiplied by Transurban s percentage ownership as well as the contribution from central group functions. Proportional EBITDA is one of the primary measures used to assess the operating performance of Transurban, with an aim to maintain a focus on operating results and associated cash generation. The EBITDA calculation from the statutory accounts does not include the EBITDA contribution of the M5 or M7 and includes the non-controlling interests in TQ and ED. Standard and Poor s Shareholder Loan Note. An interest bearing shareholder loan. Currently Transurban has SLNs on TQ and NWRG. Transurban s code on the Australian Stock Exchange Transurban Holdings Limited Transurban Holding Trust Transportation Infrastructure Finance and Innovation Act Transurban International Limited TLN Term Loan Note. An interest bearing shareholder loan. Currently Transurban has TLNs in place on NWRG and M5. TOLL REVENUE Toll revenue includes revenue from customers, specifically tolls, service and fee revenue. TQ USD WEIGHTED AVERAGE COST OF DEBT Transurban Queensland. Name change post acquisition of Queensland Motorways (QM). Transurban has a 62.5% interest in TQ. US Dollars Calculated using proportional debt WEIGHTED AVERAGE MATURITY Calculated based on weighted average maturity of total group debt facility WGEA Workplace Gender Equality Agency 56