Transurban Group Appendix 4E Year ended 30 June 2019 (Previous corresponding period: Year ended 30 June 2018)
The Transurban Group (the Group) comprises the following entities:
Transurban Holdings Limited (ABN 86 098 143 429) Transurban Holding Trust (ARSN 098 807 419) Transurban International Limited (ABN 90 121 746 825)
Results for announcement to the market1
Statutory results compared to the prior period Revenue from ordinary activities increased 26.3 per cent to $4,166 million; Profit from ordinary activities after tax decreased 63.7 per cent to $170 million; Profit from ordinary activities after tax excluding significant items decreased 46.8 per cent to $260 million; Earnings before depreciation and amortisation, net finance costs, equity accounted investments and incomes taxes (EBITDA) increased 21.0 per cent to $1,996 million; EBITDA excluding significant items increased 21.0 per cent to $2,021 million; Net profit attributable to security holders of the stapled group decreased 64.7 per cent to $171 million; and Net profit attributable to security holders of the stapled group, excluding significant items decreased 48.4 per cent to $261 million.
Proportional results compared to the prior period Toll revenue increased 10.3 per cent to $2,581 million; EBITDA decreased 4.4 per cent to $1,696 million; EBITDA excluding significant items increased 12.3 per cent to $2,016 million; and Free cash increased 25.7 per cent to $1,527 million.
Distributions Amount per Franked Security amount per cents Security % Final distribution (declared prior to balance date) 28.0 - Final dividend (declared prior to balance date) 2.0 100 30.0
Interim distribution for the current year 28.0 - Interim dividend for the current year 1.0 100 29.0
Final distribution (prior year) 25.5 - Final dividend (prior year) 2.5 100 28.0
For personal use only use personal For Record date for determining entitlements to the final current 28 June 2019 year distribution and dividend
Date of payment of final distribution 9 August 2019
1 Figures used for calculating percentage movements are based on whole numbers.
Distribution Reinvestment Plan Under the Distribution Reinvestment Plan (DRP), security holders may receive additional stapled securities in substitution for some or all cash distributions in respect of their stapled securities. The last date for the receipt of an election notice for participation in the DRP was 1 July 2019 and the participation rate was 3 per cent. No discount has been applied when determining the price at which stapled securities will be issued under the DRP for the current period distribution.
Explanation of results For further explanation of the results please refer to the accompanying ASX Release and “Our Business Performance” within the FY19 Corporate Report. This document includes presentation of results on a statutory as well as non-statutory basis. The non- statutory basis includes proportional toll revenue, proportional EBITDA, underlying proportional EBITDA and free cash. Significant items are those items where their nature is sufficiently significant to the financial statements and not in the ordinary course of business. These items have been disclosed in Note B6 to the Financial Statements of the FY19 Corporate Report. Proportional results Proportional EBITDA excluding significant items is one of the primary measures that the Board uses to assess the operating performance of the Group, with an aim to maintain a focus on operating results and associated cash generation. It reflects the contribution from individual assets to Transurban’s operating performance and permits a meaningful analysis of the performance of the Group’s assets. Proportional EBITDA is the aggregation of EBITDA from each asset multiplied by Transurban’s percentage ownership as well as the contribution from central Group functions. Proportional EBITDA is reconciled to the statutory income statement in Note B4 to the Financial Statements of the FY19 Corporate Report. Free cash Free cash is the primary measure used to assess the cash performance of the Group. It represents the cash available for distribution to security holders. Free cash is broadly calculated as: Statutory cash flow from operating activities; Add back transaction and integration costs related to acquisitions; Add back payments for maintenance of intangible assets; Add capital releases from 100% owned assets; Less debt amortisation of 100% owned assets; Less cash flow from operating activities from consolidated non-100% owned assets; Less allowance for maintenance of intangible assets for 100% owned assets; and Add distributions and interest received from non-100% owned entities, adjusted to exclude debt amortisation for Interlink Roads Pty Ltd. Net tangible asset backing
30 June 2019 30 June 2018 $ $ Net tangible asset backing per stapled security* 3.53 2.83
(*) - Net tangible assets used as the basis for this calculation include the concessions and permits relating to the operational assets of the Group. Assets of this type are characterised as intangibles
For personal use only use personal For under Australian Accounting Standards.
Entities over which control has been gained or lost The Group gained control over Interlink Roads Pty Ltd on 18 September 2018.
From the date of acquisition to 30 June 2019, revenue of $248 million and a statutory loss after taxation of $25 million was included in the profit or loss with regard to Interlink Roads Pty Ltd. Excluding significant items related to the acquisition, Interlink Roads Pty Ltd contributed a net loss after taxation of $16 million, influenced by amortisation recorded following the acquisition.
Investments in associates and joint venture entities The Transurban Group has investments in the following associates and joint venture entities:
Name of company Ownership interest Net profit contribution to the Transurban Group 2019 2018 2019 2018 % % $M $M
North Western Roads Group Trust 50.0 50.0 - -
North Western Roads Group Pty Ltd 50.0 50.0 - - NorthConnex State Works Contractor 50.0 50.0 - -
Pty Ltd Interlink Roads Pty Ltd 65.4 50.0 10 33 Bluedot Innovation, Inc. 20.0 20.0 (1) - STP Project Trust 50.0 - (152) - STP Asset Trust 50.0 - (191) -
STP PT Pty Ltd 50.0 - - - STP AT Pty Ltd 50.0 - - - (334) 33 1. Transurban’s share of net profits of the North Western Roads Group are not recognised due to the North Western Roads Group’s historical accumulated loss position. 2. The $10 million net profit contribution to the Transurban Group from Interlink Roads Pty Ltd is presented above through 18 September 2018, the date of disposal of the Group’s equity accounted investment in Interlink Roads Pty Ltd.
Other information required by Listing Rule 4.3A The remainder of information requiring disclosure to comply with Listing Rule 4.3A is contained in the FY19 Corporate Report (which includes the Directors’ Report) and an ASX Release.
Audit This report has been based on accounts which have been audited by the Group’s auditors. A copy of the unqualified audit report can be found in the attached FY19 Corporate Report.
Amanda Street Company Secretary
7 August 2019 For personal use only use personal For Corporate
Report For personal use only use personal For For the year ended 30 June 2019 19 59 cents per stapled security distributed in FY19, Our FY19 growth of 5.4% on FY18 performance highlights 374K hours average workday travel-time savings
Up to 78% safer roads than comparable alternatives 4 major projects opened to traffic New M4 Tunnels1, Logan Enhancement Project2, Purchased Gateway Upgrade North and 51% Inner City Bypass upgrade of WestConnex
For personal use only use personal For as part of Sydney Transport Partners Consortium
1 New M4 Tunnels were substantially completed in FY19 and opened to traffic on 13 July 2019 2 Logan Enhancement Project completion works are underway and expected to be finalised in August 2019 Linkt Assist hardship program established 2.0% average daily traffic growth
Tunnelling completed on $15M 2 reduction in fees due to fee and enforcement projects reform enhancing positive outcomes for NorthConnex and New M5 customers
Committed to Financial For personal use only use personal For Inclusion Action Plan Contents
6 Introduction and overview
Our Chairman and CEO begin the Corporate Report with a review of the year’s performance and their outlook for the future. This is followed by an overview of who we are and what we stand for, along with a summary of our roads and projects.
We outline our strategy and how this helps us create value for all of our stakeholders. We also detail how we engage with our stakeholders and respond to their feedback.
An overview of the major external factors influencing our business now and into the future
concludes this section. For personal use only use personal For 6 About this report 8 Chair’s message 9 CEO’s message 10 About us 12 Our strategy 14 Engaging our stakeholders 16 External influences Reporting suite— all available at transurban.com/ 18 investor-centre Our business performance FY19 Corporate Report— this report Here we detail our activities and 60 The holistic performance of progress against our business Transurban in FY19 including priorities. We have divided Directors’ our Financial Statements. the information into our main Report stakeholder groups to capture FY19 Results the value we have created for Presentation The Directors’ Report for each of them. FY19 has been prepared Management presentation of financial and non-financial As required by the Corporations in accordance with the requirements of the results including non- Act 2001, this section also statutory analysis. includes commentary on the Corporations Act 2001. Group’s financial performance FY19 Sustainability Data and position. and Climate Change Disclosures The section concludes with our outlook for FY20 including near- 64 Supplement to the Corporate term priorities and distribution Remuneration Report including information guidance. related to our assessment Report and management of climate- 19 Customers related impacts. 24 Community Detailed information on the 32 Our people remuneration of Directors and FY19 UN Sustainable key management personnel is Development Goals 36 Government and industry included in this section along Progress Report 40 Business partners with our remuneration strategy and suppliers and governance information. Progress report on the nine UN SDGs that are particularly 44 Investors relevant to Transurban, including associated targets, performance during the year and summary of key initiatives 87 implemented. 50 Financial Governance Statements Corporate Governance Statement and risk The Financial Statements and Corporate Governance accompanying notes are for Statement in accordance with
For personal use only use personal For This section provides an the year ended 30 June 2019 the ASX Council’s Corporate overview of our approach for Transurban Holdings Limited Governance Principles and to governance and risk Recommendations and controlled entities, including management, including how (3rd Edition). Transurban International Limited we manage and mitigate our and Transurban Holding Trust. key risks. Tax Transparency Report
51 Governance This section also includes our Overview of our corporate security holder information, 52 Board of directors structure, approach to tax including the 20 largest holders and tax position for FY18— 54 Risk management of our stapled securities. available late August 2019. Transurban 6 FY19 Corporate Report
About this report
The FY19 Corporate Report covers the PricewaterhouseCoopers has conducted Key changes period from 1 July 2018 to 30 June 2019 an independent audit of the Financial unless otherwise specified. Statements and Remuneration Report. This year we have taken a Detailed information on the audit is We have used a variety of processes new approach to our annual available in Section E of the Financial and sources to pinpoint the topics Statements on page 176. report by providing a holistic discussed in this report, including the view of our business in a Global Reporting Index (core option), Additionally, KPMG has provided limited single document. the International Integrated Reporting assurance over the following selected Framework, stakeholder feedback and non-financial data points included in Along with our Financial external commentary. our reporting suite: Road Injury Crash Statements, the FY19 Index; Recordable Injury Frequency Rate; The United Nations’ Sustainable * Corporate Report outlines Scope 1 GHG emissions (tCO2e ); Scope 2 Development Goals (SDGs) have also * GHG emissions (tCO2e ); Customer how we have performed guided our reporting. We have identified * vehicle GHG emissions (tCO2e ); Nitrogen and created value for our six nine SDGs (Figure 1) as being particularly oxides (NOx) emissions (tonnes*); and stakeholder groups. relevant to our business. A progress community investment. report detailing our performance against We have also enhanced our the nine goals is available at transurban. Select non-financial data points within Remuneration Report to com/fy19-sustainability-sdgs. this report are estimates informed by provide further context on part-year data and trend analysis of Since 2006, we have produced an annual our remuneration strategy previous years. This estimated data is Sustainability Report to detail our non- identified by an asterisk (*). and governance. financial performance and contributions to the community. This information is now Further information on the methodology included in our annual Corporate Report, used for sustainability data in this recognising that sustainability benefits report, including limited assurance all our stakeholders. Additional detail is statement by KPMG, is available in the available in the FY19 Sustainability Data FY19 Sustainability Data and Climate and Climate Change Disclosures, available Change Disclosures. at transurban.com/investor-centre. The remaining information in this report is This report also includes our Financial derived from the group’s internal records Statements, which have been prepared and from information available in the in accordance with the Corporations Act public domain and has been through an 2001 and Australian accounting standards. internal review process. Detailed information on the basis of preparation of our Financial Statements is available on page 96.
Figure 1: Aligning our Sustainability Strategy with the UN SDGs
In FY19, we changed our Sustainability Strategy to better align with the nine UN SDGs most relevant to us and
For personal use only use personal For our stakeholders. In doing so, we reinforced our commitment to the UN Global Compact, and contribution to global sustainability efforts.
Our strategy is supported by a set of objectives and work program.
Throughout this report, we have used the UN SDG icons (left) to show how our activities are contributing to the global goals.
Introduction and overview Introduction and overview 7
Our recognitions
Global Real Estate Sustainability Dow Jones Sustainability FTSE4Good Benchmark—Infrastructure (2018) Index (2018) Member of Global Index for 1st globally for Transportation 1st toll road operator and 2nd for 15 years Infrastructure and 3rd overall globally Transportation and Transportation- Infrastructure sector globally
Ethibel Socially Responsible Workplace Gender Equality MSCI Investment Register Agency (Australia) AAA ESG Rating Excellence label in the 2019 Ethibel Employer of Choice Citation Investment Register for five years
Our affiliations
Global Reporting Initiative (GRI) UN Global Compact Task Force for Climate-related Utilised for our sustainability Participant since 2009 Financial Disclosures reporting for 14 years Implementing recommendations
Carbon Disclosure Project IS and Envision Participant in 2019 Sustainability ratings for
major projects For personal use only use personal For Transurban 8 FY19 Corporate Report
Lindsay Maxsted Chair and independent Non-executive Director Chair’s message
The overall success of Transurban rests on our capacity to create mutually beneficial relationships with our many stakeholders.
To that end, this year we have compiled a Corporate Report that highlights our balanced approach and goes beyond the numbers to provide a holistic view of the long-term value—financial and non-financial—we create.
This Report includes more comprehensive information on our long-term strategy, the issues that may impact it Financial year 2019 has been a tremendously rewarding and how we are responding. It notes that we have revised period for Transurban, with significant achievements our business strategy to ensure it continues to be clearly across all facets of the business. aligned with the expectations of our various stakeholders. Our strategy is to provide sustainable transport solutions Our solid financial results and progress in operations and that offer choice, reliability, safety, transparency and development projects, clearly demonstrates the success value. Our purpose remains unchanged—to strengthen of our business strategy to produce positive outcomes for communities through transport. our customers, communities, government and business partners, our people and investors. Also, within the Corporate Report we have provided information such as our environmental performance During the period, the balance sheet has remained strong within major project delivery and operations and how we as highlighted by our investment grade credit metrics, are working with others in our industry to address risks achieved alongside significant portfolio development and improve outcomes. We have also provided examples activity. In addition, cash flow continues to grow as we of how we have practically responded to the challenges balance our objectives of growing distributions while that many growing cities face with increasing congestion creating long term value for security holders. and cost-of-living pressures. This includes establishing Key financial highlights of the period ended Our purpose remains a dedicated team to assist 30 June 2019: unchanged—to strengthen customers in social or financial • statutory net profit of $170 million hardship, building on our long- communities through standing hardship policy. • 12.3 per cent growth in Earnings Before transport. Interest, Tax, Depreciation and Amortisation I hope this expanded 1 (EBITDA) to $2,016 million commentary in the Corporate • distribution of 59 cents per security, a 5.4 per cent Report provides you with a greater understanding of the increase on the distribution paid in FY18. various initiatives supporting our overall strategy.
Transurban constantly seeks to balance long-term value Finally, on behalf of the Board, I acknowledge the work of creation with maintaining distribution growth to our the Executive Team, led by Scott Charlton and that of all of investors. For the year ending 30 June 2020, the Board our employees. has issued distribution guidance of 62 cents per security, Their commitment and effort will form the basis for the an increase of 5.1 per cent on the FY19 distribution. Our
For personal use only use personal For continued success of Transurban in what promises to be guidance reflects the Board’s confidence in the strength of another extremely busy year. our underlying business.
I would like to take this opportunity to thank our security holders for their continued support of Transurban and, in particular, support for the recent capital raisings that have underpinned the development projects that will create Lindsay Maxsted further value over the long term. Chair
1 Proportional EBITDA, excluding significant items Introduction and overview 9
CEO’s message
It has been an exceptional year for Transurban as we Other major achievements in FY19 include: continued to build our portfolio for the long term, progressed development projects and expanded initiatives • 1.7 million trips, saving customers an average of in customer engagement, sustainability, technology and 374,000 hours every work day safety. • two per cent average daily traffic growth
In September 2018 alongside our partners, we acquired • four major projects with lanes open: the Logan 51 per cent of Australia’s biggest road project— Enhancement Project, Gateway Upgrade North and WestConnex, and last month we opened the first Inner City Bypass upgrade in Brisbane and the New M4 underground section—the New M4 Tunnels. WestConnex Tunnels in Sydney which opened in July will be transformative for Sydney and provide significant • a revised Sustainability Strategy—aligned with the time savings for our customers with access to a critical link UN’s Sustainable Development Goals—and continued to the CBD, transport hubs and the city’s orbital network. development of our climate change management program. In May this year, just a few kilometres from Melbourne’s CBD, 500 workers completed construction of a giant After a period of sustained growth, we have set three near- launch site for our West Gate Tunnel Project. It’s from term priorities: deliver our committed projects; maximise here that the 90-metre long tunnel boring machines— the performance of operations; and enhance customer Vida and Bella—will begin digging out the twin tunnels and community offerings. that will change the face of transport in Melbourne by providing a much-needed alternative to the city’s busiest I am confident that we have a great team of highly skilled river crossing, the West Gate Bridge. The tunnels will also and committed people to continue to advance these remove thousands of trucks from local streets daily. priorities and realise the benefits of more efficient transport networks for our customers and the community. Once complete, these projects, along with our nine kilometre NorthConnex tunnels in Sydney’s northern suburbs and three Express Lanes projects in the USA, will offer valuable travel-time savings, safety and reliability for motorists, ultimately improving liveability and productivity Scott Charlton in these cities. Chief Executive Officer
These projects are the highly visible demonstrations of how we go about achieving our company purpose, to strengthen communities through transport. What isn’t as obvious is the hard work of the thousands of Transurban people behind the scenes.
These people are focused on making sure our roads operate as efficiently and safely as possible. They’re listening to and learning from our customers and the community to ensure their interactions and experiences with us are as easy as possible. Others are preparing for the future of transport through technology, working For personal use only use personal For on initiatives to reduce our environmental footprint and developing industry-leading and diverse talent to take Transurban into the future.
Scott Charlton Chief Executive Officer and Executive Director Transurban 10 FY19 Corporate Report
About us
1996 Transurban was established in Melbourne
17 We design our roads toll roads in Australia for the long term, and North America ensuring they’ll deliver real and lasting benefits to cities and their 30.8 communities. weighted average concession length (in years)
As one of the world’s largest toll-road Every day more than 1.7 million trips are operators, our business is about getting taken on our roads. We are persistent in people where they want to go, as quickly looking for ways to make travel easier for and safely as possible to assist in achieving everyone by using technology to create 8 our purpose—to strengthen communities more efficient roads and a better customer through transport. experience. projects scheduled for completion by FY24 Listed on the Australian Securities Exchange As an industry leader, we set high standards (ASX) in 1996, Transurban was established in for our performance on social and Melbourne with the development of CityLink, environmental issues, and we invest in both one of the city’s major transport corridors. in order to contribute to social inclusion and manage our environmental impacts. Today we have 17 toll roads in Sydney, Melbourne and Brisbane, Australia, as well as in the Greater Washington Area and Montreal in North America. Our values We have eight projects underway that Our values set the agenda for the will offer major improvements in the way motorists move around our cities. way we work and how we interact with all of our stakeholders. We design our roads for the long term, ensuring they’ll deliver real and lasting These values are: For personal use only use personal For benefits to cities and their communities. • integrity • respect • accountability • collaboration • ingenuity Introduction and overview 11
Our roads and projects
Ownership USA (as at 30 June 2019) Virginia 495 Express Lanes1 100% 68 years Concession life 2 95 Express Lanes 100% 68 years remaining
Canada Montreal A25 100% 23 years
Australia Melbourne CityLink 100% 26 years Sydney M5 West4 65.38% 42 years West Gate Tunnel 100% 23 years3 Hills M2 100% 29 years Eastern Distributor 75.1% 29 years Westlink M7 50% 29 years Brisbane Gateway Motorway 62.5% 33 years NorthConnex 50% 28 years3 Logan Motorway 62.5% 33 years Lane Cove Tunnel 100% 29 years Clem7 62.5% 32 years Cross City Tunnel 100% 16 years Go Between Bridge 62.5% 44 years New M45 25.5% 42 years Legacy Way 62.5% 46 years M5 East6 25.5% 40 years3 AirportlinkM7 62.5% 34 years M4-M5 Link7 25.5% 37 years3
1 495 Express Lanes concession includes the 495 Northern Extension Project, development framework agreed—project scope and timing subject to change
2 95 Express Lanes concession includes 395 Express Lanes and the Fredericksburg Extension both currently under construction For personal use only use personal For 3 From expected opening 4 M5 West will form part of the WestConnex M5 concession through to December 2060, once concession expires in December 2026. As at 30 June, 2019, Transurban owned 65.38 per cent of M5 West and 25.5 per cent of WestConnex 5 M4 opened May 1994, M4 Widening opened July 2017, New M4 Tunnels substantially complete in FY19 and opened to traffic in July 2019 6 Including New M5 7 M4-M5 Link and Rozelle Interchange Transurban 12 FY19 Corporate Report
Our strategy
Purpose: To strengthen
communities Stakeholder engagement through We strive to be a trusted partner to communities, customers, governments, our people, transport business partners and suppliers and investors
Optimal networks We strive to maintain a leading understanding of the transport Strategy: needs of our markets Provide sustainable transport solutions that We do this by: offer choice, reliability, safety, transparency, Delivery and value and operations We invest in technology, innovation and people to make transport safe,
reliable, simple and sustainable For personal use only use personal For
Disciplined investment We maintain a ‘best-for-network’ approach to value-adding, opportunity development Introduction and overview 13
The value we’re striving to create for our stakeholders:
Customers The millions of people and More productive and liveable cities through: businesses that use our roads • faster and more reliable travel times and services. • safer roads • choice, convenience, transparency and value for customers in the travel routes they take and the way they interact with us.
Community The communities of Sydney, Better connected and more sustainable communities through: Melbourne and Brisbane in • improved productivity and easier access to goods and services through Australia and the Greater direct transport connections Washington Area and Montreal • reduced through-traffic in local neighbourhoods in North America. • job creation through construction projects and flow-on employment opportunities • highest standards of community engagement to create local neighbourhood benefits • investment in community projects and partnerships • focus on environmental initiatives to improve local ecology and reduce the impact of our operations.
Our people Our almost 3,000 strong Highly capable workforce through: workforce, our pipeline of • job creation and skills development emerging talent and the • development of emerging talent thousands of sub-contractors who represent Transurban across • focus on safety and employee wellbeing. our projects and operations every day.
Government Our partners in federal, state Innovative and efficient transport infrastructure to cater for growing urban and industry and local governments and populations through: the transport and business • capital input freeing up government balance sheets for other priorities community we are active in. • potential to fast-track project delivery and for private sector to take on project or financial risks • private sector expertise in innovative design, construction and operations • contribution to public policy debate.
Business The 1,600+ network of suppliers Better environmental and community outcomes through influence in our partners and partners that provide the extensive supply chain through: goods and services we rely on to and suppliers • long-term relationships with lasting economic benefits in employment, deliver for our customers. goods and services procurement • risk management within our supply chain
For personal use only use personal For • opportunities for innovation and sustainable outcomes within supply chain.
Investors The institutional, superannuation, Sustainable investment proposition through: retail and debt investors that • balanced distribution growth and long-term value creation provide us with the capital to • disciplined approach to future opportunities deliver long-term, responsible growth. • superior ESG (environmental, social and governance) industry performance. Transurban 14 FY19 Corporate Report
Engaging our stakeholders
Customers Community Our people
How we engaged • “Voice of Customer” continuous • Project community engagement teams • “Our Voice” continuous listening listening program who interact through information program • “Changing Gears” online customer sessions, meetings, and digital and • Regular employee town hall meetings hard-copy communications research panel • Internal communications channels • Customer service channels including • Corporate trust survey including intranet, Webex, emails, website, app, webchat, email, phone, • Community liaison groups signage mail and retail outlets • Social media • Learning event series (internal and external speakers) • Social media • Partnerships, grant programs and • Customer Resolutions team events • Quarterly awards and recognition • Qualitative and quantitative research program
Key topics we heard • Ease and convenience of interactions • Role of the community in design of • Health, safety and wellbeing • Equity and accessibility matters responses to their concerns • Skills and capability development • Fees, charges and infringement • Direct benefits to the community • Access to flexible ways of working through projects and operations processes • Diversity and equity • Processes and governance • Transparency of value • Ongoing career opportunities • On-road experience factors such • Emissions and air quality as congestion • Impacts through project construction • Privacy and operations • Transparency of project design and delivery processes and decision making
How we responded • Significant enhancements to digital • Demonstrated positive contributions to • Health and Safety Action Plans platforms communities through partnerships and mandatory for all teams in the business • Linkt Assist dedicated hardship social and environmental initiatives • Focus on mental wellbeing within assistance team and commitment to • Joined Australian National University’s our revised Belonging and Wellbeing Financial Inclusion Action Plan Next Generation Engagement Program Strategy • Changes to fees and charges and to promote best practice in achieving • Professional development plans infringement process improvements positive community outcomes developed through annual • Increased proactive communications • Consulted with community liaison performance review program including pre-empting potential groups on major projects design • Continuous learning platform account issues and delivery complemented by specific ‘lunch • Invested in community through and learn’ series for example, macro
For personal use only use personal For • Online and roadside tools to assist in choice and value assessment for our partnerships and distributed technology and policy trends roads community grants to 42 groups in • Flexible ways of working supported by Australia and 30 in North America • Collaborate with government partners new collaborative technologies and to improve on-road experience • Facilitated development of parks and capability (variable speed trials, lane and ramp community spaces including Hornsby • Women in Leadership program modifications, incident response) Quarry—where tunnel spoil was supporting gender diversity at a mid delivered from NorthConnex Project • Additional assurance and root cause and senior level review of customer enquiries • Air quality monitored on tunnels and • Pay reviews completed annually to projects with data published publicly maintain pay equity gap of less than one per cent Introduction and overview 15
Government Business partners and industry and suppliers Investors
How we engaged • Submissions to State and Federal • Alignment and objective setting with • Annual program of institutional and government and government agency our major and long-term partners retail investor engagement including inquiries • Appointed representatives within domestic and offshore one-on-one • Appearance at public parliamentary our major partner engagements and meetings hearings formalised steering committees • Half year and full year results briefings • Industry partnerships and • Working groups and workshops with • Annual investor day memberships supply chain members • Quarterly traffic releases • Attendance and speaking at industry • Engagement with industry on intended • Asset tours events pipeline and future scope of works • Annual General Meeting • Meetings with political stakeholders, • Dedicated relationship managers and officials and regulators check-in meetings • Dedicated Investor Centre website • Bi-annual investor survey • Proxy adviser and ESG engagement
Key topics we heard • Innovative and sustainable transport • Working with our supply chain to deliver • Asset performance solutions to meet needs of growing better outcomes for all stakeholders, • Long-term value creation cities including reducing environmental • Pipeline restocking • Future-ready infrastructure impact of business activity • Distribution growth • Road safety • Managing risks within supply chain, including human rights • Capital management • Visibility and confidence of long-term • Project delivery pipeline for suppliers • Current and emerging risks • Quality of relationships • ESG performance
How we responded • Twelve road projects and upgrades • Implemented Sustainable Procurement • Delivered FY19 distribution of progressed with governments in FY19 Program including a revised Policy, 59.0 cents per stapled security, an • Worked with government partners Supplier Code of Practice and Sourcing increase of 5.4 per cent on last year’s and industry on three trials of Toolkit to address risk and promote distribution connected and automated vehicle (CAV) greater social, safety and sustainability • Acquired 51 per cent of WestConnex technologies on Transurban’s roads outcomes as part of consortium • Consultation with government on • Joined Social Traders to encourage • Advanced major project pipeline research from the Transurban Road partnerships with social enterprises with four projects opened to traffic Safety Centre • Collaborated with suppliers in readiness or substantially completed and eight • I-95 Corridor Coalition mileage-based- for the Modern Slavery Act 2018 advanced user-fee feasibility study • Continued to work closely with our • Maintenance of strong investment- For personal use only use personal For business suppliers and deliver on grade credit metrics to access broad expected pipeline of work range of debt markets • Continued to work with partners to • Active management and review of identify and respond to cyber security emerging, strategic and operational and other risks within our supply chain risks Transurban 16 FY19 Corporate Report
External influences
Growth in population Like all businesses, identifying, responding and adapting to the external environment is critical to our longevity. For simplicity we have categorised the and urbanisation major external factors influencing our business into three major themes:
Global Percentage • environmental considerations and impacts 2 3 population urbanised • population growth, urbanisation and infrastructure demand • transport technology and policy trends.
2017/18 Information about how we identify and manage risks facing our business is available in our section on Risk Management, page 54.
Environmental considerations and impacts
With an average concession of 30.8 years, we need to prepare our business for a 7.6 billion future that is sometimes difficult to predict.
Climate change and its impacts are at the forefront of a public debate.
We are taking this threat seriously and are committed to reducing our environmental impact and preparing our assets to tolerate extreme weather 55% events. More information is provided in our Sustainability Data and Climate Change Disclosures.
2050 forecast Population growth, urbanisation and infrastructure demand
The efficient movement of people, goods and services has become one of the greatest challenges for cities across the globe.
Australia’s population is expected to grow from 24.5 million in 2016 to 30 million 9.8 billion by 20304. Propelling this growth is mass urbanisation with 80 per cent of jobs now located in cities5 and more than 90 per cent of Australia’s population living in urban areas6. In North America, 82 per cent of the population lives in urban areas7.
Population growth and urbanisation is putting unprecedented demands on already-stretched transport infrastructure.
68% While network enhancements may alleviate this pressure, transport operators need to explore long-term technological solutions to manage demand by
improving the efficiency of existing infrastructure. For personal use only use personal For
2 United Nations Department of Economics and Social Affairs, World Population Prospects, 2017 3 United Nations Department of Economic and Social Affairs, World Urbanization Prospects, 2018 4 Australian Bureau of Statistics, Australian Demographic Statistics, June 2017 5 Grattan Institute, Mapping Australia’s Economy: cities as engines of prosperity, 2014 6 Australian Bureau of Statistics, Census data 2017 7 United Nations Department of Economic and Social Affairs, World Urbanization Prospects, 2018 Introduction and overview 17
Transport technology and policy trends
Connected and automated vehicles Convergence of these Most experts agree that the move to connected and trends will be key to the autonomous vehicles (CAVs) has the potential to future of transport fundamentally change the way we move around cities. Low levels of automation such as adaptive cruise control and lane-keep assist are becoming increasingly available in the standard vehicle fleet. As we move into the 2030s we expect adoption rates of highly automated vehicles to increase significantly.
Zero emission vehicles
Low and zero emission vehicles (ZEVs)—mainly electric vehicles and hydrogen vehicles, will help minimise Zero emission the environmental impacts of road travel. Technology improvements and increasing demand will continue to vehicles improve cost competitiveness and model availability.
Road user charging
Improving vehicle fuel efficiency and greater numbers of ZEVs will have a profound bearing on the amount of revenue governments collect from fuel excise, which is Connected and used for the development of roads and infrastructure. automated vehicles Governments and transport sector experts have acknowledged the need to reform the way drivers pay for Road user roads to provide a fair system that generates a sustainable revenue stream and also offers ways to get more out of charging existing infrastructure by managing demand. This need will increase significantly over the next decade.
Smart mobility
Ride-hailing and ride-sharing services, multi-modal transport platforms and transport-on-demand apps are already giving people greater certainty, choice and Smart mobility convenience in how they travel. Smart mobility will become the most popular and affordable mode of personal travel and may contribute to the gradual decline of the cost of travel and private vehicle ownership.
The implication—more kilometres travelled The nature, scale and timing of these changes are difficult to predict. We believe that their convergence will redefine urban mobility—creating a safer, more sustainable, integrated and automated road transport network. Impacts may include: • Increased demand—Population growth and urbanisation will continue to increase transport demand. For personal use only use personal For • Improved efficiency—The introduction of platooning allows smaller headways and higher speeds for more efficient use of road space. Motorways are set to benefit earlier with CAV-designated lanes. • New mobility options—CAVs have the potential to provide new solutions for freight/delivery and for those otherwise unable to drive including the elderly, children and those with disabilities. • Favourable economics—Use of ZEVs, CAVs and rise in smart mobility will likely lead to lower travel costs. • Improved safety—Increasing interconnection and automation removes human error, reducing accidents and congestion. 18 Our business performance
Customers Business partners Pages 19–23 and suppliers Pages 40–43 Community Pages 24–31 Investors Pages 44–49 Our people Pages 32–35
Government and industry
Pages 36–39 For personal use only use personal For Our business performance: Customers 19
374K hours in travel time saved daily
1.7M trips per day globally
280K pieces of customer feedback collected annually
Strategic focus areas and UN SDGs relevant to this Customers section
Our customers make approximately 1.7 million trips each day, collectively travelling around six billion kilometres on our roads each year.
In Australia we serviced more than 5 million three brands—Linkt (Australia), Express Lanes customers and over 3.6 million drivers chose our (US) and A25 (Canada). Our mandate is to roads in North America in FY19. make it easy, show we care and add value for our customers. When customers choose our toll roads, they expect faster, more reliable and safer trips than Listening and responding to their feedback helps For personal use only use personal For alternative routes offer. They also expect their us improve customer satisfaction and enhance interactions with us to be easy, convenient our products and services. and intuitive. In this section we highlight our initiatives to We are focused on meeting those expectations improve customer experience and report on by providing an exceptional on-road experience our on-road performance. and seamless customer service through our Transurban 20 FY19 Corporate Report
Faster, safer customer travel
Travel-time savings are central to our customer-value In some cases, these technologies have improved speeds proposition and on an average workday in FY19, our by 34 per cent during peak periods and lane capacity by customers collectively saved 374,000 hours in travel more than six per cent. We leverage the traffic data we globally (refer to Figure 2). This has increased by 14 per cent collect to identify congestion pinch points as well as new since last financial year, due to increasing congestion on ways to improve travel times (refer to Figure 3). arterial roads and more efficient travel on our roads as well as the addition of travel benefits for customers on the M4 With new lanes and on-road technology added following and A25. the completion of the CityLink Tulla Widening project (in Melbourne), a six-month trial began in March 2018 Figure 2: Annualised benefits across each of to increase speeds from 80km/h to 100km/h in off-peak times when it was safe to do so. Technology was used our regions to continuously monitor the road, checking weather conditions and traffic volumes to set speeds. Following the Average Average daily success of the trial and overwhelmingly positive feedback daily trips travel-time savings8 from customers, speed limits on this section of CityLink Brisbane 406K 69K continue to be dynamically managed. Melbourne 854K9 89K Similarly, in FY19, a trial on Westlink M7 and the Hills M2 Sydney 817K 195K in Sydney showed that to improve safety and travel times North America 147K 21K during the morning peak hour, we needed to reduce speed limits just before congestion occurred. This proactive management of speed limits resulted in safer traffic flow The efficiency and safety of our roads is supported by the and reduced rear-end crashes. This strategy has since data-led approach we take to operating our motorways. been implemented as business as usual. We use technologies such as variable speed and message signs, ramp metering, vehicle detectors and CCTV cameras to create ‘managed motorways’ to keep traffic flowing.
Figure 3: Data to detect traffic hot spots across our Sydney roads (AM peak hour—March 2019)
Hills M2 Pennant Hills Road
Westlink M7 Lane Cove Road
Lane Cove Tunnel
M4 Motorway
Warringah Freeway Direction 10 9 8 7 6 5 am of travel
Elizabeth Drive Moore Park Road
Eastern Distributor
Wentworth Avenue Southern Cross Drive
Hume Motorway For personal use only use personal For Marsh Street
M5 M5 East The River Road King George Road
Speed (kilometres per hour)
0–20 20–30 30–40 40–50 50–60 60–70 70–80 >80
8 Savings displayed are an average of workday travel-time savings in hours from July 2018 to June 2019. Australian and Montreal savings are calculated from TomTom data. Savings for Greater Washington Area are calculated from Regional Integrated Transportation Information System data 9 ADT in Melbourne is reflective of transactions Our business performance: Customers 21
Figure 4: Road Injury Crash Index