Toll Roads│Australia

February 2, 2015

Transurban Group COMPANY NOTE TCL AU / TCL.AX Current A$9.30 Market Cap Avg Daily Turnover Free Float Target A$9.26 US$13,778m US$36.06m 100.0% Prev. Target A$9.21 A$17,729m A$43.07m 1,902 m shares Up/Downside -0.4% Conviction| |

Notes from the Field NorthConnex reaches close Important: The recommendation has been made on a 12 month view and may not suit your TCL has announced financial close on NorthConnex with key project investment needs or timeframe. The basis it is details consistent with the in-principle agreement announced in May prepared on is summarised on the last page of 2013. With the funding package designed to provide cash flows while this report. PLEASE CONTACT YOUR ADVISER TO DISCUSS THIS GENERAL construction is ongoing, we see the project as positive for TCL’s RECOMMENDATION BEFORE ACTING ON IT. medium-term cash flow profile and longer-term growth profile.

We had previously factored the Morgans Financial Limited (A.B.N. 49 010 669 Project highlights CA 726) AFSL235410 A Participant of ASX NorthConnex into our forecasts but This project is another solid deal for Group have made changes to assumptions TCL, in our view, and highlights the Sourced from CIMB Securities (Australia) reflecting the ancillary funding competitive advantage TCL has in Limited (“CSAL”) ABN 84 002 768 701 arrangement. While our short-term AFS Licence number 240 530 operating a network of assets across forecasts remain largely unchanged, . By harnessing multiple funding www.morgans.com.au changes to longer-term forecasts see sources across various assets, TCL has our valuation and DCF-based TP successfully negotiated the provision of TCL150202 increase to A$9.26 (from A$9.21), and a needed piece of infrastructure that we maintain our Add rating. may not have been commercial on its Company Visit Expert Opinion NorthConnex reaches close own merits. Combined with the Channel Check Customer Views additional widening and ancillary ———————————————————————————————————————— TCL announced it has reached funding arrangement, TCL also has Show Style "View Doc Map" financial close on the NorthConnex achieved alignment of the majority of its project. Key details for the A$2.9bn project are consistent with earlier Sydney road concession lives and truck announcements, with construction to multipliers potentially enabling future commence imminently and expected discussions around issues such as to be completed by end-2019. TCL’s network pricing. share (A$1.05bn) will be financed Maintain Add rating initially through the corporate balance With yield and a pipeline of projects sheet over the five-year construction providing defensive growth, in a low period, though the M7/NorthConnex interest rate environment, we consortium has rights to issue an continue to see a positive outlook for additional A$1.5bn of debt across TCL and maintain our Add rating on both projects. The project will be an increased A$9.26 target price (DCF funded through a number of sources based) reflecting minor changes to including Government contributions our forecasts. Risks to our valuation (20%), existing revenue sources (ie and target price include truck multipliers) (30%), concession higher-than-expected bond rates, extensions (25%) and tolling of the lower-than-expected traffic growth link itself (25%). and M&A activity integration risks.

Price Close Relative to S&P/ASX 200 (RHS) Financial Summary 9.90 137.0 9.40 130.6 Jun-13A Jun-14A Jun-15F Jun-16F Jun-17F 8.90 124.1 Revenue (A$m) 868 985 1,587 1,714 1,780 8.40 117.7 7.90 111.3 Operating EBITDA (A$m) 676 759 1,189 1,259 1,309 7.40 104.9 6.90 98.4 Net Profit (A$m) 171.7 282.0 196.8 179.6 194.7 6.40 92.0 25 Normalised EPS (A$) 0.12 0.16 0.10 0.09 0.10 20 15 Normalised EPS Growth 209% 39% (36%) (10%) 7% 10 FD Normalised P/E (x) 79.65 57.34 90.26 99.82 92.96 5 Vol m DPS (A$) 0.31 0.35 0.39 0.43 0.46 Feb-14 May-14 Aug-14 Nov-14 Dividend Yield 3.33% 3.76% 4.19% 4.62% 4.95% Source: Bloomberg EV/EBITDA (x) 27.09 26.08 21.95 21.30 20.99

52-week share price range P/FCFE (x) 830.1 76.4 NA NA NA 9.30 Net Gearing 139% 66% 106% 122% 139% 6.75 9.30 P/BV (x) 4.05 3.05 2.34 2.50 2.67 ROE 4.99% 5.95% 2.93% 2.42% 2.78% 9.26 Current Target % Change In Normalised EPS Estimates (3.52%) (8.11%) (6.68%) Normalised EPS/consensus EPS (x) 0.59 0.45 0.40

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES REGARDING COMPANIES THAT ARE THE SUBJECT OF THIS REPORT AND AN EXPLANATION OF RECOMMENDATIONS CAN BE FOUND AT THE END OF THIS DOCUMENT.

Transurban Group│Australia February 2, 2015

PEER COMPARISON

Research Coverage Bloomberg Code Market Recommendation Mkt Cap US$m Price Target Price Upside Macquarie Atlas Roads MQA AU AU ADD 1,173 2.95 3.44 16.5% Transurban Group TCL AU AU ADD 13,778 9.30 9.26 -0.4%

Rolling P/BV (x) 12-month Forward Rolling FD P/E (x) 30.00 50 45 25.00 40 35 20.00 30 15.00 25 20 10.00 15 10 5.00 5 0.00 0 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Macquarie Atlas Roads Transurban Group Macquarie Atlas Roads Transurban Group

Peer Aggregate: P/BV vs ROE Peer Aggregate: 12-mth Fwd FD P/E vs FD EPS Growth 5.00 6.0% 50 150% 4.50 4.2% 48 108% 4.00 2.4% 3.50 0.6% 46 67% 3.00 -1.2% 2.50 -3.0% 44 25% 2.00 -4.8% 42 -17% 1.50 -6.6% 1.00 -8.4% 40 -58% 0.50 -10.2% 0.00 -12.0% 38 -100% Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Rolling P/BV (x) (lhs) ROE (See Footnote) (rhs) 12-mth Fwd FD P/E (x) (See Footnote) (lhs) FD EPS Growth (See Footnote) (rhs)

Valuation FD P/E (x) (See Footnote) P/BV (x) EV/EBITDA (x) Dec-14 Dec-15 Dec-16 Dec-14 Dec-15 Dec-16 Dec-14 Dec-15 Dec-16 Macquarie Atlas Roads 28.09 14.11 12.66 1.82 1.59 1.40 NA NA NA Transurban Group 70.26 94.96 96.11 2.65 2.42 2.58 23.66 21.65 21.11

Growth and Returns FD EPS Growth (See Footnote) ROE (See Footnote) Dividend Yield Dec-14 Dec-15 Dec-16 Dec-14 Dec-15 Dec-16 Dec-14 Dec-15 Dec-16 Macquarie Atlas Roads NA 99.1% 11.4% 6.5% 12.1% 11.9% 4.47% 5.42% 6.38% Transurban Group -5.2% -26.0% -1.2% 4.1% 2.7% 2.6% 3.98% 4.40% 4.79%

SOURCE: CIMB, COMPANY REPORTS

Calculations are performed using EFA™ Monthly Interpolated Annualisation and Aggregation algorithms to December year ends. NPAT/EPS values for calculations and valuations are based on recurring and normalised values for GAAP and IFRS accounting standard companies respectively.

2

Transurban Group│Australia February 2, 2015

BY THE NUMBERS

Share price info P/BV vs ROE 12-mth Fwd FD Normalised P/E vs FD Share px perf. (%) 1M 3M 12M 3.50 7.00% 160 Normalised EPS Growth 300% Relative 3.6 12.6 26.2 3.00 6.00% 140 250% Absolute 7.1 14.4 34.6 2.50 5.00% 120 200% 100 150% Major shareholders % held 2.00 4.00% 80 100% 1.50 3.00% Unisuper 9.5 60 50% 1.00 2.00% CBA 6.4 40 0% 0.50 1.00% 20 -50% Bank of New York Mellon 2.1 0.00 0.00% 0 -100% Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Rolling P/BV (x) (lhs) ROE (See Footnote) (rhs) 12-mth Fwd Rolling FD Normalised P/E (x) (lhs) Diluted Normalised EPS Growth (rhs)

Profit & Loss

(A$m) Jun-13A Jun-14A Jun-15F Jun-16F Jun-17F Growth driven by addition of QM and Total Net Revenues 939 1,045 1,671 1,802 1,872 CCT to the asset portfolio Gross Profit 939 1,045 1,671 1,802 1,872 Operating EBITDA 676 759 1,189 1,259 1,309 Depreciation And Amortisation -312 -330 -577 -615 -631 Operating EBIT 364 429 612 644 677 Financial Income/(Expense) -237 -345 -442 -457 -474 Pretax Income/(Loss) from Assoc. -10 115 11 21 45 Non-Operating Income/(Expense) 0 0 0 0 0 Profit Before Tax (pre-EI) 117 199 181 208 249 Exceptional Items Pre-tax Profit 117 199 181 208 249 Taxation 57 45 41 47 56 Exceptional Income - post-tax 0 8 0 0 0 Profit After Tax 175 252 222 255 305 Minority Interests -3 30 -25 -75 -110 Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Preference Dividends (Australia) Net Profit 172 282 197 180 195 Normalised Net Profit 175 244 222 255 305 Fully Diluted Normalised Profit 172 274 197 180 195

Cash Flow

(A$m) Jun-13A Jun-14A Jun-15F Jun-16F Jun-17F EBITDA 676 759 1,189 1,259 1,309 Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow 4 41 42 45 94 Net Interest (Paid)/Received -257 -276 -480 -480 -484 Tax Paid -12-3000 Cashflow From Operations 411 521 751 824 918 Capex -262 -221 -233 -838 -840 Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments -442 -151 -129 -738 -751 Other Investing Cashflow 24 -679 -4,232 25 26 Cash Flow From Investing -680 -1,051 -4,594 -1,551 -1,565 Debt Raised/(repaid) 285 735 2,213 430 466 Proceeds From Issue Of Shares 100 2,696 0 0 0 Shares Repurchased Dividends Paid -421 -427 -593 -660 -713 Preferred Dividends Other Financing Cashflow 0 0 0 0 0 Cash Flow From Financing -36 3,004 1,619 -230 -247 Total Cash Generated -304 2,475 -2,224 -957 -894 Free Cashflow To Equity 16 206 -1,630 -297 -181 Free Cashflow To Firm -12 -253 -3,363 -247 -163

SOURCE: CIMB RESEARCH, COMPANY DATA

Transurban Group│Australia February 2, 2015

BY THE NUMBERS

Balance Sheet

(A$m) Jun-13A Jun-14A Jun-15F Jun-16F Jun-17F Total Cash And Equivalents 259 2,879 816 624 497 Total Debtors 89 84 100 103 105 Inventories Total Other Current Assets 1 0 0 0 0 Total Current Assets 349 2,963 916 727 602 Fixed Assets 180 226 467 540 613 Total Investments 532 268 279 300 345 Intangible Assets 8,128 10,386 16,226 16,243 16,243 Total Other Non-Current Assets 882 1,025 1,015 1,038 1,049 Total Non-current Assets 9,723 11,905 17,987 18,122 18,250 Short-term Debt 438 721 721 721 721 Current Portion of Long-Term Debt Total Creditors 106 181 186 190 195 Other Current Liabilities 413 591 603 615 628 Total Current Liabilities 957 1,493 1,510 1,526 1,544 Total Long-term Debt 4,499 6,077 8,290 8,720 9,186 Hybrid Debt - Debt Component Total Other Non-Current Liabilities 1,048 1,119 1,119 1,119 1,119 Total Non-current Liabilities 5,547 7,196 9,409 9,839 10,305 Total Provisions 202 217 222 228 234 Total Liabilities 6,707 8,906 11,141 11,593 12,082 Shareholders' Equity 3,402 5,800 7,626 7,193 6,818 Minority Interests -37 162 137 62 -48 Total Equity 3,365 5,962 7,763 7,255 6,769

Key Ratios

Jun-13A Jun-14A Jun-15F Jun-16F Jun-17F Revenue Growth 4.9% 13.5% 61.1% 8.0% 3.9% Operating EBITDA Growth 6.2% 12.2% 56.6% 5.9% 4.0% Operating EBITDA Margin 77.9% 77.1% 74.9% 73.4% 73.5% Net Cash Per Share (A$) -3.16 -2.06 -4.27 -4.55 -4.81 BVPS (A$) 2.30 3.05 3.97 3.71 3.49 Gross Interest Cover 1.06 0.91 1.10 1.12 1.14 Effective Tax Rate 0% 0% 0% 0% 0% Net Dividend Payout Ratio 265% 190% 378% 460% 459% Accounts Receivables Days 35.11 31.97 21.18 21.65 21.30 Inventory Days N/A N/A N/A N/A N/A Accounts Payables Days N/A N/A N/A N/A N/A ROIC (%) 2.91% 3.43% 3.91% 2.65% 2.77% ROCE (%) 5.80% 5.26% 4.92% 4.56% 4.79%

SOURCE: CIMB RESEARCH, COMPANY DATA

Transurban Group│Australia February 2, 2015

TCL remains our top pick in the space Despite its strong run over recent months, TCL remains our top pick in the transport infrastructure space, and our investment thesis remains unchanged. TCL has 1) ongoing traffic growth across its expanded road portfolio and CPI/CPI+ linked pricing increases across the majority of its assets driving revenue growth; 2) firm cost control resulting in this growth largely hitting the bottom line; and 3) a range of growth opportunities to further earnings and distribution growth over the medium term. With growth hard to come by in the current market, we believe TCL remains an attractive investment proposition. While the yield trade may come under pressure this year as the interest rate cycle in the USA turns, we believe that companies with strong growth prospects and inflation protection should hold up against peers, and hence our expectations that TCL will continue to perform solidly. While looking relatively fully priced at 21.4x FY15F EV/EBITDA (20.3x FY16F EV/EBITDA) when compared to the market, TCL is trading in line with historical multiples and continues to offer a 4.2% FY15F yield, partially franked yield and 9.5% DPS growth pa over the next three years. With yield and defensive growth, we believe that TCL continues to have a positive outlook and maintain our Add rating on an increased A$9.26 target price (DCF based), reflecting changes to our forecasts. Risks to our valuation and the achievement of our target price include higher-than-expected bond rates as well as lower-than-expected traffic growth and M&A activity integration risks.

Figure 1: Trading in line with historical EV/EBITDA levels

x 40

35

30

25

20

15

10

5

0

EV/EBITDA (LTM) Average (LTM)

SOURCES: CIMB, COMPANY REPORTS

NorthConnex reaches financial close TCL announced it has reached financial close on the NorthConnex project. Key project details remain consistent with previous company announcements and are set out below, though the agreement includes a touch more upside than we expected.  The total project cost is expected to be cA$2.9bn, with the federal and state governments to contribute up to A$405m each to the project. Construction is expected to commence in early 2015 (late February), with completion date due by end 2019.  The project is to be funded through toll revenue under the concession agreement (dated to 2048) with tolls aligned with the M2 main toll point. All this is in line though the escalation at the greater of quarterly CPI or 1% is ahead of our expectations of a peg to CPI. The M7 also sees a concession extension (to June 2048, +11.4 years) and an increase in the truck toll

Transurban Group│Australia February 2, 2015

multiplier from parity to 3x over the next two years (increase to commence almost immediately).

Figure 2: NorthConnex project economics

NB Chart does not include potential ancillary funding encompassing M2/LCT concession extensions and LCT truck toll multiplier increase SOURCES: CIMB, COMPANY REPORTS

 North West Roads Group, the new HoldCo of M7 and NorthConnex (TCL 50% stake), has the ability to draw A$1.5bn of debt to fund the project, though it appears that TCL is looking to fund its 50% share (A$1.05bn) from corporate facilities over the next five or so years.  TCL has also announced a widening of the M2 and additional funding arrangement. TCL will fund a A$105m widening of the M2 to integrate the NorthConnex project, providing 3.5km of additional westbound. This two-year project will commence in late 2015. TCL is also paying A$200m to the NSW Government to fund the project. In return, TCL is getting an increase in the M2 concession to June 2048 (+2.1-years), an increase in the LCT concession to 2048 (+11.5-years), an increase in the LCT truck multiplier to 3x from 2x over a two-year period and an increase in the escalation clause for the LCT from CPI to greater of CPI or 1% per quarter (for trucks). While we expected the increase in the truck toll multiplier, as part of the deal, the increase in the truck toll escalator was ahead of expectations. We expect NorthConnex to commence operations in FY20 and combined M7/NorthConnex FY21F cash flows (first full year) of A$287m (100% basis). We estimate that the NorthConnex/Westlink package delivers an equity IRR of around 15% and around 14% for the M2 widening and ancillary funding project.

About the NorthConnex project  Involves the construction of two nine kilometre tolled tunnels connecting the southern end of the M1 Pacific Highway at Wahroonga to the Hills M2 Motorway at the .  Approximately 29-year concession agreement until June 2048  Construction is expected to commence in early 2015 (late February) with completion date due by end 2019  Vehicles using the NorthConnex will bypass 21 traffic lights saving up to 15 minutes in travel time  Expected to take 5,000 trucks per day off Pennant Hills Road  Toll prices and escalation aligned to the main toll points at Hills M2 (quarterly escalation of CPI or one percent, whichever is greater)

Transurban Group│Australia February 2, 2015

Figure 3: NorthConnex project map

SOURCE: COMPANY REPORTS

Earnings forecast changes We make limited changes to our, forecasts in the near term with the announcements largely in line with expectations. FY15F proportionate EBITDA remains unchanged at A$1272m while FY16F proportionate EBITDA increases slightly as we revise expectations for EBITDA at the LCT reflecting the phasing in of an increased truck toll multiplier.

Transurban Group│Australia February 2, 2015

Figure 4: Earnings forecast changes (proportionately consolidated) FY15F FY16F FY17F Prev New % chg Prev New % chg Prev New % chg Toll Revenue CityLink 570.7 570.7 0.0% 566.5 566.5 0.0% 550.7 550.7 0.0% Hills M2 218.8 218.8 0.0% 237.3 237.3 0.0% 253.5 253.5 0.0% M1 83.9 83.9 0.0% 88.8 88.8 0.0% 93.5 93.5 0.0% M5 102.3 102.3 0.0% 118.5 118.5 0.0% 137.8 137.8 0.0% 129.6 129.6 0.0% 151.7 151.7 0.0% 168.9 168.9 0.0% 75.4 75.4 0.0% 80.5 81.3 1.0% 84.7 87.6 3.4% 55.3 55.3 0.0% 57.5 57.5 0.0% 59.3 59.3 0.0% Gateway Bridge 114.7 114.7 0.0% 122.0 122.0 0.0% 129.8 129.8 0.0% Logan Motorway 95.0 95.0 0.0% 101.2 101.2 0.0% 107.9 107.9 0.0% Go Between Bridge 7.7 7.7 0.0% 8.3 8.3 0.0% 9.0 9.0 0.0% Clem7 29.5 29.5 0.0% 31.2 31.2 0.0% 32.9 32.9 0.0% Legacy Way 0.0 0.0 nm 24.7 24.7 0.0% 27.9 27.9 0.0% Pocahontas 0.0 0.0 nm 0.0 0.0 nm 0.0 0.0 nm 495 Express 39.2 39.2 0.0% 45.4 45.4 0.0% 50.0 50.0 0.0% 95 Express Lanes 6.6 6.6 0.0% 20.9 20.9 0.0% 29.6 29.6 0.0% Total toll revenue 1528.5 1528.6 0.0% 1654.5 1655.3 0.1% 1735.4 1738.3 0.2% Other revenue 157.5 157.5 0.0% 167.1 167.2 0.0% 173.5 173.5 0.0% Total revenue 1686.1 1686.2 0.0% 1821.7 1822.5 0.0% 1908.8 1911.8 0.2%

EBITDA CityLink 516.4 516.4 0.0% 509.8 509.8 0.0% 492.9 492.9 0.0% Hills M2 190.4 190.4 0.0% 206.5 206.5 0.0% 220.6 220.6 0.0% M1 Eastern Distributor 57.0 57.0 0.0% 61.3 61.3 0.0% 66.4 66.4 0.0% M5 98.7 98.7 0.0% 115.0 115.0 0.0% 133.7 133.7 0.0% Westlink M7 110.1 110.1 0.0% 129.0 129.0 0.0% 145.3 145.3 0.0% Lane Cove Tunnel 56.5 56.5 0.0% 61.1 61.8 1.1% 64.4 66.6 3.4% Cross City Tunnel 38.2 38.2 0.0% 40.2 40.2 0.0% 42.1 42.1 0.0% Gateway Bridge 91.7 91.7 0.0% 100.0 100.0 0.0% 109.0 109.0 0.0% Logan Motorway 76.0 76.0 0.0% 84.0 84.0 0.0% 90.6 90.6 0.0% Go Between Bridge 5.4 5.4 0.0% 6.7 6.7 0.0% 7.3 7.3 0.0% Clem7 13.3 13.3 0.0% 17.1 17.1 0.0% 21.4 21.4 0.0% Legacy Way 0.0 0.0 nm 7.4 7.4 0.0% 11.1 11.1 0.0% Pocahontas 0.0 0.0 nm 0.0 0.0 nm 0.0 0.0 nm 495 Express Lanes 10.4 10.4 0.0% 23.2 23.2 0.0% 34.7 34.7 0.0% 95 Express Lanes -1.3 -1.3 0.0% 6.3 6.3 0.0% 17.7 17.7 0.0% Other/DRIVe 9.1 9.1 0.0% 10.0 10.0 0.0% 10.8 10.8 0.0% EBITDA 1271.8 1271.9 0.0% 1377.7 1378.3 0.0% 1467.9 1470.1 0.2% EBITDA margin 83.2% 83.2% 0.0pt 83.3% 83.3% 0.0pt 84.6% 84.6% 0.0pt

Cash flow from operations 1268.1 1268.1 0.0% 1341.1 1341.7 0.0% 1439.2 1441.4 0.2% Less uncontrolled cash -194.7 -194.7 0.0% -238.9 -238.9 0.0% -281.8 -281.8 0.0% Net interest paid -464.4 -470.6 1.3% -438.0 -446.4 1.9% -482.6 -484.3 0.3% M1 dividend 26.3 26.3 0.0% 30.4 30.4 0.0% 35.4 35.4 0.0% M5 dividend 55.9 55.9 0.0% 67.8 67.8 0.0% 86.6 86.6 0.0% QML dividend 109.8 109.8 0.0% 134.0 134.0 0.0% 156.7 156.7 0.0% Other 0.0 0.0 nm 0.0 0.0 nm 0.0 0.0 nm Maintenance capex -51.2 -51.2 0.0% -52.4 -52.4 0.0% -53.7 -53.7 0.0% Free cashflow 749.8 743.6 -0.8% 843.9 836.1 -0.9% 899.7 900.3 0.1% Average shares on issue 1912.6 1910.4 -0.1% 1934.6 1927.9 -0.3% 1958.1 1946.3 -0.6% Free cashflow per share 39.2 38.9 -0.7% 43.6 43.4 -0.5% 45.9 46.3 0.8%

DPS 39.0 39.0 0.0% 43.0 43.0 0.0% 46.0 46.0 0.0% Cash coverage 100.5% 99.8% -0.7pt 101.4% 100.9% -0.5pt 99.8% 100.6% 0.8pt SOURCES: CIMB, COMPANY REPORTS

Transurban Group│Australia February 2, 2015

Figure 5: Financial summary (statutory) Year to 30 Jun (A$m) AIFRS AIFRS AIFRS AIFRS AIFRS Closing price (A$) 9.30Price target (A$) 9.26 Income statement (Statutory) 2013A 2014A 2015F 2016F 2017F Valuation metrics Divisional sales 868.0 985.0 1586.5 1713.7 1780.2 Preferred methodology DCF Val'n (A$) 9.26 Total revenue 938.7 1045.0 1670.7 1801.9 1871.7 EBITDA 676.2 759.0 1188.9 1258.5 1308.7 SOTP Valuation 2014A 2015F 2016F 2017F Depreciation and amortisation -312.1 -330.0 -576.7 -614.8 -631.3 CityLink 7875.6 8039.0 8180.8 8342.2 EBIT 364.1 429.0 612.2 643.7 677.3 Hills M2 3149.7 3445.8 3595.2 3797.2 Net interest expense -237.0 -345.0 -442.4 -456.5 -474.2 M1 Eastern Distributor 720.8 755.2 793.5 830.6 Associate income -9.7 115.0 11.2 20.5 45.5 M5 South West 741.5 785.1 765.2 757.5 Pre-tax profit 117.4 199.0 181.1 207.7 248.6 Lane Cove Tunnel 699.8 728.0 933.3 964.9 Income tax expense 57.2 45.0 40.9 47.0 56.2 Westlink M7 1967.3 2520.6 2669.2 2810.6 After-tax profit 174.5 244.0 222.0 254.7 304.8 Cross City Tunnel 287.3 263.0 264.3 263.8 Minority interests -2.8 30.0 -25.2 -75.0 -110.1 Capital Beltway 344.1 615.2 720.2 734.6 NPAT 171.7 274.0 196.8 179.6 194.7 I95 0.0 578.7 874.9 762.5 Significant items 0.0 8.0 0.0 0.0 0.0 QML 0.0 3419.3 3627.3 3829.7 NPAT post abnormals 171.7 282.0 196.8 179.6 194.7 Other 26.3 33.1 -316.3 -776.3 Total assets 15812.4 21183.0 22107.6 22317.5 Cash flow statement (Stat) 2013A 2014A 2015F 2016F 2017F Net cash/(corporate debt) -1232.6 -3595.6 -4170.2 -4664.7 EBITDA 676.2 759.0 1188.9 1258.5 1308.7 Total NPV 14579.8 17587.4 17937.4 17652.8 Change in working capital Shares on issue 1902.0 1918.8 1936.9 1955.8 Net interest (pd)/rec -256.5 -276.0 -480.2 -480.0 -484.3 Per share valuation 7.67 9.17 9.26 9.03 Taxes paid -12.2 -3.0 0.0 0.0 0.0 Other oper cash items 3.8 41.3 42.4 45.3 93.8 Multiples (prop cons) 2014A 2015F 2016F 2017F Cash flow from ops (1) 411.3 521.3 751.1 823.8 918.2 Enterprise value (A$m) 22450.6 27208.4 28020.8 29045.0 Capex (2) -252.0 -185.0 -196.2 -800.2 -800.9 EV/Sales (x) 20.3 17.8 16.9 16.7 Disposals/(acquisitions) -207.8 -39.0 -5.7 -10.3 -22.9 EV/EBITDA (x) 24.0 21.4 20.3 19.8 Other investing cash flow 24.3 -679.0 -4232.2 24.9 25.5 Cash flow from invest (3) -435.6 -903.0 -4434.0 -785.6 -798.3 At target price (prop cons) 2014A 2015F 2016F 2017F Incr/(decr) in equity 100.0 2696.0 0.0 0.0 0.0 Enterprise value (A$m) 22374.5 27131.7 27943.4 28966.7 Incr/(decr) in debt 284.8 735.0 2212.7 430.0 466.2 EV/Sales (x) 20.3 17.7 16.9 16.7 Ordinary dividend paid -420.7 -427.0 -593.5 -660.2 -713.0 EV/EBITDA (x) 24.0 21.3 20.3 19.7 Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Other financing cash flow 0.0 0.0 0.0 0.0 0.0 Per share data 2014A 2015F 2016F 2017F Cash flow from fin (5) -35.9 3004.0 1619.2 -230.2 -246.8 Ending shares on issue 1902.0 1918.8 1936.9 1955.8 Forex and disc ops (6) 1.4 -2.0 0.0 0.0 0.0 Average share on issue 1689.5 1910.4 1927.9 1946.3 Inc/(decr) cash (1+3+5+6) -58.8 2620.3 -2063.7 -192.1 -127.0 EPS (cps) 16.2 10.3 9.3 10.0 Equity FCF (1+2+4) 159.3 336.3 554.9 23.6 117.2 EPS (normalised) (c) 16.7 10.3 9.3 10.0 Dividend per share (c) 35.0 39.0 43.0 46.0 Balance sheet (Statutory) 2013A 2014A 2015F 2016F 2017F Dividend payout ratio (%) 210% 379% 462% 460% Cash & deposits 259.4 2879.0 816.0 623.9 497.0 Dividend yield (%) 3.8% 4.2% 4.6% 4.9% Trade debtors 88.5 84.0 100.1 102.6 105.2 Dividend growth (%) 12.9% 11.4% 10.3% 7.0% Investments 532.3 268.0 279.2 299.8 345.2 Goodwill 260.3 261.0 261.0 261.0 261.0 Growth ratios 2014A 2015F 2016F 2017F Other intangible assets 7868.1 10125.0 15965.0 15982.3 15981.9 Sales growth 13.5% 61.1% 8.0% 3.9% Fixed assets 180.2 226.0 467.0 540.0 613.0 Operating cost growth 17.8% 75.9% 14.5% 3.6% Other assets 882.9 1025.0 1015.0 1038.5 1048.5 EBITDA growth 12.2% 56.6% 5.9% 4.0% Total assets 10071.6 14868.0 18903.4 18848.1 18851.8 EBIT growth 17.8% 42.7% 5.1% 5.2% Short-term borrowings 438.3 721.0 721.0 721.0 721.0 NPAT growth 59.6% -28.2% -8.8% 8.4% Trade payables 105.6 181.0 185.5 190.2 194.9 EPS growth 38.9% -36.5% -9.6% 7.4% Long-term borrowings 4499.2 6077.0 8289.7 8719.7 9185.9 Normalised EPS growth 42.9% -38.3% -9.6% 7.4% Provisions 202.4 217.0 222.4 228.0 233.7 Other liabilities 1461.2 1710.0 1722.0 1734.3 1746.9 Operating performance 2014A 2015F 2016F 2017F Total liabilities 6706.7 8906.0 11140.7 11593.1 12082.4 Asset turnover (%) 2.0 2.3 2.3 2.4 Share capital 7976.0 10680.0 10680.0 10680.0 10680.0 EBITDA margin (%) 77.1 74.9 73.4 73.5 Other reserves -104.1 -79.0 -79.0 -79.0 -79.0 EBIT margin (%) 43.6 38.6 37.6 38.0 Retained earnings -4469.5 -4801.0 -2975.1 -3407.8 -3783.3 Net profit margin (%) 27.8 12.4 10.5 10.9 Other equity 1.0 2.0 3.0 4.0 5.0 Return on net assets (%) 7.2 7.9 8.9 10.0 Total equity 3402.4 5800.0 7625.9 7193.2 6817.7 Net debt (A$m) 3919.0 8194.7 8816.8 9409.9 Minority interest -37.4 162.0 136.8 61.8 -48.3 Net debt/equity (%) 65.7 105.6 121.5 139.0 Total shareholders' equity 3365.0 5962.0 7762.7 7255.0 6769.4 Net interest/EBIT cover (x) 1.2 1.4 1.4 1.4 Total liabilities & SE 10071.6 14868.0 18903.4 18848.1 18851.8 ROIC (%) 4.0% 3.5% 3.8% 4.1% SOURCE: CIMB RESEARCH, COMPANY DATA

Transurban Group│Australia February 2, 2015

Figure 6: Financial summary (proportionate) Year to 30 Jun (A$m) Asset details Conc end Stake COE Val' Per share EBITDA 2013A 2014A 2015F 2016F 2017F CityLink 2034 100% 8.8% 8181 4.22 CityLink 441.5 483.4 516.4 509.8 492.9 Hills M2 2048 100% 8.8% 3595 1.86 Hills M2 117.4 162.4 190.4 206.5 220.6 M1 Eastern Distributor 2048 75% 9.3% 794 0.41 M1 Eastern Distributor 53.7 52.6 57.0 61.3 66.4 M5 South West 2026 50% 8.8% 765 0.40 M5 South West 87.9 88.9 98.7 115.0 133.7 Lane Cove Tunnel 2048 100% 8.8% 933 0.48 Lane Cove Tunnel 36.9 50.3 56.5 61.8 66.6 Westlink M7/ Northconnex 2048 50% 8.8% 2669 1.38 Westlink M7 84.8 96.5 110.1 129.0 145.3 Cross City Tunnel 2035 100% 9.3% 264 0.14 Cross City Tunnel nm nm 38.2 40.2 42.1 495 Express Lanes 2087 68% 10.0% 720 0.37 Gateway Bridge nm nm 91.7 100.0 109.0 95 Express Lanes 2087 75% 10.0% 875 0.45 Logan Motorway nm nm 76.0 84.0 90.6 QML 2051 100% 9.0% 3627 1.87 Go Between Bridge nm nm 5.4 6.7 7.3 Other 100% 9.5% -4486 -2.31 Clem7 nm nm 13.3 17.1 21.4 Total 17937 9.26 Legacy Way nm nm nm 7.4 11.1 495 Express Lanes -5.5 2.4 10.4 23.2 34.7 AADT (000) 2013A 2014A 2015F 2016F 2017F 95 Express Lanes nm nm -1.3 6.3 17.7 CityLink 779.8 792.5 808.4 796.2 772.4 Other 11.4 -2.8 9.1 10.0 10.8 Hills M2 91.7 104.3 113.7 118.2 121.8 Total EBITDA 828.0 933.7 1271.9 1378.3 1470.1 M1 Eastern Distributor 50.8 52.0 52.8 53.5 54.3 Growth 6.6% 12.8% 36.2% 8.4% 6.7% M5 South West 122.5 121.0 128.3 137.3 144.1 Lane Cove Tunnel 69.8 76.1 80.3 83.5 86.0 EBITDA margin 2013A 2014A 2015F 2016F 2017F Westlink M7 142.2 153.7 162.9 163.9 165.5 CityLink 89.0% 90.3% 90.5% 90.0% 89.5% Cross City Tunnel nm nm 36.7 37.3 37.8 Hills M2 81.9% 84.1% 87.0% 87.0% 87.0% Gateway Bridge nm nm 112.1 115.8 119.6 M1 Eastern Distributor 71.1% 66.5% 68.0% 69.0% 71.0% Logan Motorway nm nm 150.8 156.0 161.5 M5 South West 93.1% 94.9% 96.5% 97.0% 97.0% Go Between Bridge nm nm 11.6 11.9 12.3 Lane Cove Tunnel 60.0% 73.0% 75.0% 76.0% 76.0% Clem7 nm nm 26.6 27.4 28.2 Westlink M7 81.0% 83.6% 85.0% 85.0% 86.0% Legacy Way nm nm nm 19.2 21.1 Cross City Tunnel nm nm 69.0% 70.0% 71.0% 495 Express Lanes 4.9 12.5 15.9 19.3 19.5 Gateway Bridge nm nm 80.0% 82.0% 84.0% 95 Express Lanes nm nm 22.4 33.6 45.4 Logan Motorway nm nm 80.0% 83.0% 84.0% Portfolio traffic growth 2.4% 4.0% 31.3% 2.9% 0.9% Go Between Bridge nm nm 70.0% 80.0% 81.0% Clem7 nm nm 45.0% 55.0% 65.0% Toll revenue 2013A 2014A 2015F 2016F 2017F Legacy Way nm nm nm 30.0% 40.0% CityLink 495.8 535.4 570.7 566.5 550.7 495 Express Lanes nm nm 26.5% 51.1% 69.4% Hills M2 143.3 193.0 218.8 237.3 253.5 95 Express Lanes nm nm -20.0% 30.0% 60.0% M1 Eastern Distributor 75.5 79.1 83.9 88.8 93.5 Portfolio margin 83.5% 83.7% 83.2% 83.3% 84.6% M5 South West 94.4 93.7 102.3 118.5 137.8 Lane Cove Tunnel 61.5 68.9 75.4 81.3 87.6 Net interest 2013A 2014A 2015F 2016F 2017F Westlink M7 104.7 115.3 129.6 151.7 168.9 CityLink 0.0 0.0 0.0 0.0 0.0 Cross City Tunnel nm nm 55.3 57.5 59.3 Hills M2 -30.8 -46.7 -50.5 -50.5 -50.5 Gateway Bridge nm nm 114.7 122.0 129.8 M1 Eastern Distributor -26.6 -30.0 -31.5 -31.5 -31.5 Logan Motorway nm nm 95.0 101.2 107.9 M5 South West -14.2 -11.9 -21.3 -25.9 -25.9 Go Between Bridge nm nm 7.7 8.3 9.0 Lane Cove Tunnel -17.7 -10.9 -10.9 -10.9 -10.9 Clem7 nm nm 29.5 31.2 32.9 Westlink M7 -90.7 -93.2 -110.1 -129.0 -145.3 Legacy Way nm nm nm 24.7 27.9 Cross City Tunnel 0.0 0.6 -15.2 -15.2 -15.2 495 Express Lanes 4.9 19.3 39.2 45.4 50.0 495 Express Lanes -11.6 -25.9 -40.0 -51.7 -50.3 95 Express Lanes nm nm 6.6 20.9 29.6 95 Express Lanes 0.0 -7.4 -4.9 -4.9 -4.9 Pocahontas 11.3 11.3 nm nm nm QML 0.0 0.0 -86.6 -91.3 -92.8 Total toll revenue 991.5 1116.1 1528.6 1655.3 1738.3 Other -182.2 -178.2 -208.4 -219.6 -227.5 Growth 6.3% 12.6% 37.0% 8.3% 5.0% Total -373.6 -403.6 -579.4 -630.5 -654.8

Free cashflow 2013A 2014A 2015F 2016F 2017F Income statement 2013A 2014A 2015F 2016F 2017F Cash flow from operations 677.4 833.0 1268.1 1341.7 1441.4 Toll revenue 991.5 1116.1 1528.6 1655.3 1738.3 Less uncontrolled cash (M1 + -29.7 -46.5 -194.7 -238.9 -281.8 Other revenue 113.5 114.5 157.5 167.2 173.5 Net interest paid -256.5 -276.0 -470.6 -446.4 -484.3 Total revenue 1105.0 1230.6 1686.2 1822.5 1911.8 M1 dividend 29.7 25.9 26.3 30.4 35.4 Operating costs -285.9 -292.3 -427.5 -458.5 -456.7 M5 dividend 50.0 57.0 55.9 67.8 86.6 EBITDA (pre corporate) 819.1 938.3 1258.6 1364.0 1455.1 M7 (Term Loan Notes) 0.0 0.0 0.0 0.0 0.0 Corporate fees 8.9 -4.6 13.3 14.2 15.0 Other -8.9 0.0 0.0 0.0 0.0 EBITDA (post corporate) 828.0 933.7 1271.9 1378.3 1470.1 Maintenance capex -18.7 -21.2 -51.2 -52.4 -53.7 Net interest -373.6 -403.6 -579.4 -630.5 -654.8 Free cashflow per share 443.3 572.2 743.6 836.1 900.3 Tax -27.4 -23.0 -20.3 -25.4 -33.2 Shares on issue 1470.5 1689.5 1910.4 1927.9 1946.3 Operating cashflow 427.0 507.1 672.2 722.4 782.1 Free cashflow per share 30.1 33.9 38.9 43.4 46.3 Growth 1.0% 12.3% 14.9% 11.4% 6.7% Gearing 2013A 2014A 2015F 2016F 2017F Net Debt 7145.7 4761.6 9363.1 10007.9 10856.3 Distributions 2013A 2014A 2015F 2016F 2017F Net Debt/(Net Debt + Equity 34.1% 21.2% 34.4% 35.7% 37.4% Distribution per share 31.0 35.0 39.0 43.0 46.0 Net Debt/EBITDA 8.6 5.1 7.4 7.3 7.4 Growth 5.1% 12.9% 11.4% 10.3% 7.0% EBITDA/Net Interest 2.2 2.3 2.2 2.2 2.2 Free cash flow per share 30.1 33.9 38.9 43.4 46.3 Average interest rate 5.2% 8.5% 6.2% 6.3% 6.0% Cash coverage of distribution 97% 97% 100% 101% 101% SOURCE: CIMB RESEARCH, COMPANY DATA

Transurban Group│Australia February 2, 2015

QUEENSLAND ORANGE (02) 6361 9166 - HEAD OFFICE (07) 3334 4888 PORT MACQUARIE (02) 6583 1735 BRISBANE - EDWARD STREET (07) 3121 5677 SCONE (02) 6544 3144 BRISBANE - TYNAN PARTNERS (07) 3152 0600 SYDNEY – LEVEL 7 CURRENCY HOUSE (02) 8216 5111 BUNDABERG (07) 4153 1050 SYDNEY – LEVEL 9 (02) 8215 5000 CAIRNS (07) 4222 0555 SYDNEY – HUNTER STREET (02) 9125 1788 CALOUNDRA (07) 5491 5422 (02) 9615 4500 EMERALD (07) 4988 2777 SYDNEY – REYNOLDS EQUITIES (02) 9373 4452 GLADSTONE (07) 4972 8000 (02) 4227 3022 GOLD COAST (07) 5581 5777 IPSWICH/SPRINGFIELD (07) 3202 3995 ACT KEDRON (07) 3350 9000 (02) 6232 4999 MACKAY (07) 4957 3033 MILTON (07) 3114 8600 VICTORIA MT GRAVATT/CAPALABA (07) 3245 5466 (03) 9947 4111 NOOSA (07) 5449 9511 BRIGHTON (03) 9519 3555 REDCLIFFE (07) 3897 3999 CAMBERWELL (03) 9813 2945 ROCKHAMPTON (07) 4922 5855 CARLTON (03) 9066 3200 SPRING HILL (07) 3833 9333 FARRER HOUSE (03) 8644 5488 SUNSHINE COAST (07) 5479 2757 GEELONG (03) 5222 5128 TOOWOOMBA (07) 4639 1277 RICHMOND (03) 9916 4000 TOWNSVILLE (07) 4725 5787 SOUTH YARRA (03) 8762 1400 YEPPOON (07) 4939 3021 TRARALGON (03) 5176 6055 WARRNAMBOOL (03) 5559 1500 SYDNEY (02) 8215 5055 WESTERN AUSTRALIA ARMIDALE (02) 6770 3300 PERTH (08) 6462 1999 BALLINA (02) 6686 4144 WEST PERTH (08) 6160 8700 BALMAIN (02) 8755 3333 BOWRAL (02) 4851 5515 SOUTH AUSTRALIA CHATSWOOD (02) 8116 1700 ADELAIDE (08) 8464 5000 COFFS HARBOUR (02) 6651 5700 NORWOOD (08) 8461 2800 (02) 4325 0884 HURSTVILLE (02) 9570 5755 NORTHERN TERRITORY MERIMBULA (02) 6495 2869 DARWIN (08) 8981 9555 NEUTRAL BAY (02) 8969 7500 NEWCASTLE (02) 4926 4044 TASMANIA NEWPORT (02) 9998 4200 HOBART (03) 6236 9000

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