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 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 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 62.5% 33 years NorthConnex 50% 28 years3 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 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

World-class incident response We monitor all our roads 24/7 and our incident response RC crews help motorists in need and keep traffic moving. We use traffic data to identify ‘hot spots’ to help determine where incident response vehicles should be positioned around the network. This ensures a fast response time. Other initiatives, such as the installation of barriers and 1 1 signage and lowering of speed limits, keep motorists and our crews safe. FY1 FY1 FY1 FY1 FY19 In FY19 in Brisbane, we ran an Australian-first trial using Road Injury Crash Index (RICI) motorbikes to expedite our incident response times on Vehicle kilometres travelled (VKT) the Gateway and Logan motorways. Within the first six months, our two motorbike responders attended more than 150 incidents—arriving two minutes earlier and clearing incidents eight minutes faster. The trial has been Safer roads extended until the end of 2019 and two extra motorbike responders will be added to the team. Our roads are among Australia’s safest and we are vigilant about finding new ways to improve safety.

Transurban’s Road Safety Strategy is based on the Safe System Approach, which recognises road safety as a shared responsibility—from individuals and businesses who use the roads to the organisations and agencies that build and manage the network.

In 2015, Transurban introduced the Road Injury Crash Index (RICI) and set ambitious targets to reduce serious road crashes on our network by 15 per cent over the coming five years. Since the establishment of RICI, we have acquired new roads and our vehicle kilometres travelled have increased by 38 per cent.

In FY19, the Road Injury Crash Index (RICI) across all Transurban assets was 4.71 injury crashes per 100 million vehicle kilometres travelled.

Our injury crash rate for FY19 was lower than FY18 (refer to Figure 4), but exceeded our ambitious target of 3.92, which we set five years ago.

We engaged Monash University Accident Research Centre to compare injury crashes on our Australian network with

other similar roads. Transurban’s roads were found to For personal use only use personal For have significantly fewer crashes than similar roads with New South Wales10 being 78 per cent lower, Victoria10 ...clearing 72 per cent lower and Queensland11 44 per cent lower. incidents eight minutes faster...

10 Comparison is of 2018 data 11 Comparison is of 2017 data Transurban 22 FY19 Corporate Report

Customer experience

Exceptional customer service is the expectation in our business and everything we do aims 31M to deliver on our three customer promises to: make it easy, show we care, and add value. Our Customer Service and Customer Experience teams continuously look for ways to meet inbound interactions12 and exceed our customers’ expectations. A dedicated quality assurance team monitors our interactions with customers.

In FY19 we completed the consolidation of all of our Australian retail brands into one national brand, Linkt. The new brand replaced CityLink in Melbourne, go via in Brisbane, and Roam 9/10 Express in Sydney to provide a simpler and easier experience for customers. interactions are digital12 We also acquired the Roam customer base in Sydney and transitioned these customers to Linkt in February 2019. More than just a name change, the introduction of Linkt also included a range of new products and services, reduced fees and a streamlined account experience.

Having a national brand has allowed us to make continued improvements to our website and 28M apps to meet our customers’ preference for digital self-service. digital sessions Listening to our customers (67 per cent of these accessed via mobile)12 Through our Voice of the Customer continuous listening program, we analyse approximately 280,000 pieces of feedback from our Australian customers each year. Our mandate is to turn customer insights into actions.

We have recently invested in a more advanced research platform which gives us greater insights into customer behaviours, feedback and their service experience. We also implemented a 4.4/5 process to follow up any feedback through the Voice of the Customer program and resolve customer enquiries. customer satisfaction rating for call centre12 Listening to our customers has helped us to improve customer satisfaction, reduce the number of complaints we receive and enhance our products and services to improve the overall experience. In FY19 we used feedback to inform a number of initiatives for our Australian customers, including:

• increasing the functionality of our digital platforms to allow customers to add vehicles to their account; pay a toll notice; order new tags; and access their statements and financial history online or via their mobile device • proactively notifying customers of potential issues with their account • improving our assurance processes to help us identify and address the root cause of customer pain points.

We also updated some of our products and services such as our Trip Compare online tool that allows drivers to make an informed choice about using a toll road (refer to Figure 5). It is available in Sydney and Melbourne on the Linkt website.

Figure 5: Trip Compare online tool

Our Trip Compare tool offers transparency to customers

Tolled trip Untolled trip For personal use only use personal For 18 59 traffic lights traffic lights 2.1L 2.5L fuel used fuel used 5kg 5.8kg CO2 emitted emitted

12 Australian customer data only, does not include North America Our business performance: Customers 23

Case study Customers benefit from toll enforcement changes

For two years we have been working closely with state governments in Australia to make changes to toll enforcement processes that help keep customers out of trouble. The program of work included:

• sending proactive notifications to customers sooner • providing customers with more time to pay their tolls • issuing fewer fines • reducing fees.

Each of these actions has contributed to lower rates of infringement for customers. For example, changes implemented as part of the West Gate Tunnel Project Agreement have reduced infringements in Victoria by 45 per cent.

While this program has reduced fee revenue, it is part of our continued focus on listening and responding to customers. ...9,700 visitors Enhancing digital experience in to Linkt Assist North America website...

In FY19, we refreshed our customer-facing tools for our North America Express Lanes brand—updating our website, mobile app and customer materials to make it clearer for customers where they need to go to pay a toll, plan a trip or ask a question. We also developed a new mobile app to make it easier for customers without accounts to pay for tolls. The mobile app launches in Linkt Assist FY20 and will be our first retail product in the Greater Washington Area. In Montreal, we are also developing In FY19 we launched Linkt Assist, our first dedicated solutions for infrequent customers to pay tolls without team to support Australian customers experiencing an account. social or financial hardship.

The team was established after extensive consultation with the financial counselling, legal assistance and community welfare sectors and builds on our long- standing hardship policy.

Linkt Assist has a dedicated website hub which includes information and tools to make it easier to get help and use our roads without incurring unnecessary fees and fines.

Through the Linkt Assist consultation process, we identified an opportunity to create a foundational Financial Inclusion Action Plan (FIAP).

For personal use only use personal For Our FIAP will detail the steps we are taking to build the financial capability and economic security of our customers and employees, while also working to create accessible services and remove barriers to employment.

Mobile app developed for our customers We look forward to launching our plan in August 2019. in the Greater Washington Area—to be launched in FY20 Transurban 24 FY19 Corporate Report

12 projects progressed or opened to traffic

72 grants and partnerships supporting local communities

2M plantings on West Gate Tunnel and WestConnex projects

Strategic focus areas and UN SDGs relevant to this section Community

Our roads and construction projects provide vital transport connections to ensure our growing cities continue to thrive and local neighbourhoods are relieved of heavy through-traffic.

These projects not only create jobs during These relationships span the length of a road construction, but improve productivity by concession, which can be decades long. For us, providing easier access to goods and services it’s important to foster positive and sustainable through direct connections and more travel relationships with each community.

For personal use only use personal For options. In this section we highlight how we are providing We recognise that a good transport system transport connections while working with must include efficient roads and well-connected, communities to improve social, economic and easily accessible and reliable public transport, environmental outcomes. along with safe routes for walking and cycling.

The nature of operating road infrastructure means Transurban has contact with the many diverse communities that border and benefit from each road. Our business performance: Community 25

NEW SOUTH WALES

NorthConnex

M7 M2 Lane Cove Hills M2 Tunnel

M4 Motorway Gore Hill/Warringah Freeway M1 Military Road E-ramp SYDNEY HARBOUR BRIDGE SYDNEY HARBOUR TUNNEL New M4 SYDNEY CBD

Westlink M7 Cross City Tunnel Proposed Western WestConnex Sydney Airport Eastern Distributor

Southern Cross Drive M5 West M1 Hume Highway Sydney Airport Moorebank Port Intermodal Terminal Botany

WestConnex, Sydney

As Australia’s biggest road infrastructure project, WestConnex is being delivered in four stages and, once complete, will provide a 33-kilometre-motorway network transforming travel in Sydney’s western and south-western suburbs. The project is part of the NSW Government’s long-term transport plan and will move traffic and heavy vehicles underground, away from neighbourhood streets. More than 10,000 jobs have been created as well as thousands of traineeships for Sydney workers. The project provides up to 18 hectares of open space Project updates for the community, as well as 23 kilometres of new and improved cycleways and walkways. NorthConnex, Sydney FY19 milestones: This project will be a twin nine kilometre tunnel linking the M1 Pacific Motorway to the Hills M2. Due for completion • M4-M5 Link tunnelling works commenced with eight of in 2020, NorthConnex will provide a route free of traffic 27 road headers now operating. Due to open in 2023. lights from Newcastle to Melbourne. Up to 5,000 trucks • New M5 tunnelling works completed on the 9-kilometre are expected to be removed from Pennant Hills Road twin tunnels. Paving works more than 95 per cent every day. The project is creating 8,700 jobs across NSW. complete13. Due to open in 2020. • Works well underway at St Peters Interchange including FY19 milestones: rehabilitation of the former Alexandria Landfill site. • Major tunnel excavation was completed in October 2018. • Delivery of legacy projects for New M4 including The • Final spoil from tunnelling was delivered early to Sprinter statue, which became a well-known Sydney For personal use only use personal For Hornsby Quarry in January 2019. Hornsby Shire Council artwork during the 2000 Sydney Olympic Games. will redevelop the quarry into a community parkland. • Paving underway with more than 85 per cent complete13. Infrastructure Sustainability rating Surface road works have added two new lanes at the • M4 Widening As Built: “Excellent” northern interchange at Wahroonga. • New M4 Tunnels design: “Leading” • New M5 design: “Leading” • The motorway control centre and northern ventilation facility topped out, reaching their full building height.

Infrastructure Sustainability rating • Design: “Leading” 13 Paving complete as at 2 August 2019 Transurban 26 FY19 Corporate Report

Hume Freeway M31

Calder Freeway M79

Melbourne Tullamarine Western Ring Road Airport Freeway M80

Western Freeway M8

Essendon Airport VICTORIA

Western Ring Road CityLink M80 Western Link M2 Eastern Freeway M3 Deer Park Bypass M8 West Gate Swanson Tunnel Dock BOLTE MELBOURNE CBD Western Ring Road Project BRIDGE CityLink M80 BURNLEY TUNNEL Southern Link West Gate M1 Webb Freeway DOMAIN Dock TUNNEL M1 WEST GATE EastLink BRIDGE Monash Freeway M3 M1

Princes Freeway M1

West Gate Tunnel Project, Melbourne

This project will provide a second river crossing between the western suburbs and CBD, providing a much-needed alternative to the West Gate Bridge. As well as removing up to 9,000 trucks off local streets in the inner west, the project will provide nine hectares of new parks, wetlands, cycle and walking tracks. Approximately 6,000 jobs are expected to be created by the project over five years of construction.

FY19 milestones:

• Two tunnel boring machines arrived in Melbourne in early 2019 and are being assembled on site with tunnelling to start in the first half of FY20. • A Community Information Centre opened at the site with more than 500 local residents attending the opening day activities in September. • Construction completed on a giant shed, 180 metres long and 90 metres wide, that will store spoil from the tunnelling to protect nearby residents from noise and dust. • About 3.5 kilometres of temporary noise walls have been installed to date, to protect residential

properties from construction noise. For personal use only use personal For

Infrastructure Sustainability rating • Design and As Built aim: ”Excellent”

One of the giant tunnel boring machines being assembled to start tunnelling on the West Gate Tunnel Project Our business performance: Community 27

B–W Parkway Dulles Greenway 295 Toll Road 495 Northern Extension John Hanson Highway Project 301 Dulles George Washington International Airport Memorial Parkway

Dulles Toll Road Dulles Access Road WASHINGTON DC 267

VIRGINIA Suitland Parkway I-66 Toll Road 66 Pennsylvania (inside the Beltway) Ronald Reagan Avenue Washington National Airport 4 495 Express Lanes

395 Express Lanes

MARYLAND

Richmond Highway 1 95 Express Lanes

95 Express Lanes

To Fredericksburg

To Fredericksburg

Fredericksburg 395 Express Lanes, Virginia, USA Extension

This project will extend the northern end of the 95 Express Lanes for 13 kilometres (eight miles) reversible to the Washington DC border and provide quicker access to major employment hubs at the Pentagon and Crystal City. The lanes are due to open in late 2019. The project will generate up to 600 new jobs during construction.

FY19 milestones: Fredericksburg Extension, Virginia, USA • Completion of Pentagon South Parking Lot, delivering improved transit and commuter connectivity. This project is extending the reversible 95 Express Lanes • Successful completion of the first three toll points. south by 16 kilometres (10 miles) along the I-95 median, to provide faster travel and easier access for residents • Project construction on schedule for customer opening and businesses along the corridor. This includes the in late 2019. 28,000 residents and employees of Marine Base Quantico, FBI Academy and Drug Enforcement Agency. 495 Northern Extension Project, FY19 milestones: Virginia, USA • Final design progressed and contractor engaged. A project to extend the 495 Express Lanes by • Ground-breaking ceremony was held in June 2019. 3.2 kilometres (two miles) north towards the Maryland border will provide further congestion relief for commuters • Construction activities are underway. through new connections to major commuter routes. Envision rating In January, Transurban and the Virginia Department of For personal use only use personal For • Design and Post Construction aim: Verified Transportation reached agreement on a development framework. The final project scope and timing is still subject to change. Transurban 28 FY19 Corporate Report

Gateway Brisbane Upgrade North Airport Port of M1 Brisbane Southern Cross Way

Australia AirportlinkM7 Tradecoast Inner City Bypass QUEENSLAND M3 Motorway M4 Legacy Way BRISBANE CBD

GO BETWEEN Clem7 BRIDGE Western Gateway Freeway M5 Motorway M1 Pacific Motorway Ipswich M3 Motorway M7 Warrego Centenary Highway Motorway M2 M5 Logan Enhancement Project Cunningham M2 Highway Ipswich Pacific Motorway M15 Motorway M2 M1

Logan Motorway M2 Mt. Lindesay Highway

Projects opened to traffic

New M4 Tunnels14, Sydney Gateway Upgrade North, Brisbane

The New M4 Tunnels were the first underground section This project upgraded the four-lane motorway between of WestConnex to be completed. The project connected the northern suburbs of Nudgee and Bracken Ridge. the M4 and extended it via twin motorway tunnels, Completed in March 2019, the project has reduced alleviating delays at the connection to suburban arterial congestion along the northern section of the motorway roads. Bypassing 22 sets of traffic lights, the tunnels will while also improving the safety and efficiency across provide more reliable trips for motorists and businesses. the network. The project, delivered by the Queensland Government with Transurban Queensland, included a new Infrastructure Sustainability rating shared pedestrian and cycle path. • Design: “Leading” Infrastructure Sustainability rating • As Built: “Excellent” Logan Enhancement Project15, Brisbane • Design: “Excellent”

This project upgraded parts of the Logan and Gateway motorways to improve travel-time reliability, safety and Inner City Bypass, Brisbane connections to residential and business areas. Works included upgrades to key interchanges, new access This upgrade delivered an additional lane in both

ramps, road widening, new cycling and walking paths and directions in a section of the bypass as well as a new For personal use only use personal For better protection for wildlife. Travel times are expected to on-ramp and intelligent traffic management systems to improve by up to 10 minutes in the afternoon peak and improve safety and efficiency. Transurban Queensland accidents reduce by 60 per cent. funded and delivered the project, which was a Brisbane City Council initiative16. Infrastructure Sustainability rating • Design: “Excellent”

14 The New M4 Tunnels were opened to traffic on 13 July 2019 15 LEP completion works are underway and expected to be finalised in August 2019 16 IS rating not pursued due to project scale Our business performance: Community 29

Engaging communities Case study Driver’s licences All of our projects are located within communities so it is open pathways to imperative that we have strong and productive relationships education, employment with them. and social We aim for a consistent approach to our engagement with connections. communities based on three principles of being: open and honest, inclusive and genuine.

Each of our projects has a dedicated team which engages with the community through every stage of the project through face-to-face meetings, and digital and hard-copy communications. Their mandate is to ensure that we achieve positive outcomes wherever possible by listening and truly understanding the unique needs of each community.

Locals’ feedback informs design

The $512 million Logan Enhancement Project is an example of community input directly shaping design.

The project is located in a Queensland Government- designated greenbelt linking the Karawatha Forest to the Flinders Range and is home to more than 200 species of wildlife. To consider how to protect native animals and improve their Driving movement around the road, Transurban Queensland formed an Environmental Reference Group. The group’s feedback was given to tenderers during the development phase to inform community their tender submissions. As a result of their feedback, the following initiatives were connections included in the project—and completed this year:

• a fauna bridge over a busy local road to link forest areas Independence and connections are two of the • nearly 25 kilometres of fauna fencing outcomes we are helping people to achieve by supporting driver training partnerships in NSW, • 40 fauna escape poles (located approximately every Victoria and Queensland. 400 metres across the corridor) • retrofitting existing culverts to encourage the safe passage In Victoria, the Transurban DriveLink Program of animals under the road. provides driving lessons to disadvantaged migrants and refugees in the City of Moonee Valley area to help them gain their licence. Since Partnerships and grants the program started, volunteer mentors have provided more than 1,250 hours of supervised As part of being a good neighbour to our communities, driving, with 20 participants gaining their licence. we strive to find ways we can make long-term, positive contributions through partnerships or investments. In NSW, we have partnered with the Salvation Army’s Drive for Life program to help people Over the past 12 months we have implemented a new, aged 16 to 25 years get their driver’s licence. The consistent approach to social investment across our business. program is aimed at disadvantaged young people. For personal use only use personal For This ensures we are focused on activities that benefit the community in the most meaningful way possible. In Queensland, we partner with a program called Women at the Wheel, which helps refugees and Our areas of focus are: safe and accessible transport, local migrant women in the Logan area learn to drive communities and education and training. and in turn, improve their employment and social opportunities. Since starting in early 2018, the The program also includes community grants. In Australia, program has supported 18 women to access more we awarded more than $180,000 to 42 community groups in than 150 driving lessons. Nearly half of these FY19. In North America, more than USD75,000 was awarded participants have successfully obtained their to over 30 organisations and programs. licence and the remaining women are very close. Transurban 30 FY19 Corporate Report

Energy17 Minimising our impact FY18 FY19*

The reality of climate change means that it is more important than ever to manage our energy use Scope 1 (fuel) and impacts on the environment. By reducing our consumption of resources, goods and services, we can create more efficient operations that reduce our greenhouse gas (GHG) emissions.

We have set targets to reduce our energy consumption by 10 per cent by 202318 (compared to 2013) and halve our GHG emissions by 2030 (compared to 2016) and we consistently look for 53,412 GJ opportunities in our operations to achieve those goals.

Energy and carbon

51,142 GJ Our major energy needs are fuel (Scope 1) for operations and maintenance activities and electricity (Scope 2) for lighting, tunnel ventilation and operation of our offices.

In FY19 our Scope 1 and 2 energy use and GHG emissions remained stable despite growth in our business and a new acquisition, the A25 bridge in Montreal; and remained similar to the Scope 2 (electricity) previous year. Across our existing asset base, upgrades to roadside equipment continue to drive improvement in energy efficiency as we seek to reduce the energy intensity of our operations through the delivery of several longer-term projects.

Electricity usage represents 97 per cent of our total emissions and we expect these emissions 514,958 GJ will decrease significantly over time as we continue to implement long-term energy reduction and renewable energy procurement initiatives. Detailed information about our emissions including individual assets is provided in the FY19 Sustainability Data and Climate Change Disclosures.

We have continued a two-year trial of an alternative ventilation strategy for the Clem7 tunnel, 517,013 GJ which has resulted in energy savings and, in turn, reduced GHG emissions. Full implementation has the potential to reduce axial fan run times by up to 40 per cent and GHG emissions of * 1,049 tCO2e annually (refer to Figure 6). While our GHG emissions reduction target focuses on our direct Scope 1 and 2 emissions, we are continuing to examine how we can reduce the impact of our Scope 3 emissions (indirect emissions linked to supply chain). Detailed supply chain analysis in FY19 has allowed us to report comprehensive Scope 3 emissions for the first time and forms the basis of ongoing engagement with our supply chain to build long-term partnerships and reduce the carbon intensity of our 17 GHG emissions supply chain and target processes such as cement production.

FY18 FY19* We design and operate our roads in ways that reduce carbon emissions released by our customers’ vehicle use. This means reducing vertical grades in road/tunnel designs to limit engine labouring and using our smart motorway technology to drive greater efficiency and to reduce Scope 1 and 2 congestion as emissions are higher in stop-start conditions. In FY19, we estimated that emissions * from vehicles on our roads would be slightly less than 1,000,000 tCO2e (refer to Figure 7).

Figure 6: Clem7 ventilation Figure 7: FY19 Scope 1, 2, 3 and trial savings* customer emissions*17 120,837 tCO2e

GJ tCO2e tCO2e FY19 4,202 922 Scope 1 3,540 Total trial (to date, end FY19) 5,133 1,126 Scope 2 117,077 120,617 tCO2e

Forecast annual 4,782 1,049 Scope 3 617,503 For personal use only use personal For Customer emissions 993,961

17 Operational assets only, totals exclude M5 and M7. WestConnex data not included in FY19, will be included in future years as projects become fully operational. Total emissions are net ”market-based” emissions including GreenPower reductions 18 The 2013 baseline was updated in 2016 to include all new assets at that time. No new assets will be added to this baseline Our business performance: Community 31

Air quality

Poor air quality can impact the liveability, health and safety of communities so maintaining good air quality is vital— particularly on our roads and projects.

Tunnels can help reduce air pollution by moving traffic off roads where people live and work, putting vehicles underground. For example, our NorthConnex project is expected to remove around 5,000 trucks off Pennant Hills Road daily.

In a tunnel, vehicle emissions can be controlled and dispersed more effectively. They are also monitored to ensure standards are met.

On all our tunnel projects we are monitoring air quality around the site to understand current local conditions. This will help us measure any changes to local air quality once a tunnel opens.

Transurban is required to meet stringent air quality Native trees and shrubs are measures within our operational tunnels, which are transforming a disused site reported to and enforced by the relevant environmental on the M2 authority in each state.

Air quality monitoring includes in-tunnel conditions, ventilation outlet emissions, and ambient air quality around tunnel portals. Air quality data and links to detailed Local ecology public reporting are provided in the FY19 Sustainability Restoring the natural environment along our motorways Data and Climate Change Disclosures. and projects is important to local communities and to In FY19 Transurban fully complied with all air quality Transurban. In Melbourne we will be planting more than monitoring requirements and annual emissions from our 170,000 trees and a million shrubs and around nine operational tunnels were about a tenth of regulatory limits. hectares of parks and wetlands as part of the West Gate Tunnel project. Twelve local schools have joined in the project’s mulch recycling program, reusing trees cut down Greener roads to improve air quality during construction for playgrounds and landscaping.

Plant ‘breathing walls’ have been installed on two of our In Sydney more than 18 hectares of new recreational green Sydney motorways—Hills M2 and Eastern Distributor— space will be created as part of the WestConnex project in a six-month trial to test their impact on air quality. while more than 900,000 trees and shrubs will be planted.

We have partnered with Sydney business Junglefy, which We also look for opportunities to regenerate disused sites creates the plant walls to filter air pollutants. While the next to our motorways that have the potential to improve walls have shown much promise in the laboratory for or protect local biodiversity. We have partnered with improving urban air quality, the trial will provide real-world Landcare to regenerate two areas—the Power Street loop feedback. site in Melbourne and a five hectare site alongside the M2 in Sydney. Once the trial is complete in late 2019, the University of Technology Sydney will release a scientific paper discussing In Sydney, as tubestock grows into mature plants, fauna is the performance. We will then consider the results to expected to return to the site from the adjacent Lane Cove For personal use only use personal For determine next steps. National Park. At the Melbourne site, a May 2019 Landcare survey showed weed cover had significantly decreased and nine bird species had been attracted to the site. Transurban 32 FY19 Corporate Report

WGEA Employer of Choice citation

9K+ workforce

50% female senior executives

Strategic focus areas and UN SDGs relevant to this section Our people

We achieve success as a business by enabling the performance and achievements of our people.

Transurban’s direct workforce is made up of Leaders at every level within the business are around 3,00019 people, however our day-to-day custodians of this culture and are expected to operations and major infrastructure projects create an environment where people have equal rely on a much larger workforce. In total, over chance to excel. 9,00020 people work as part of our broader

workforce across construction and business In this section we highlight how we create a For personal use only use personal For operations. safe and supportive workplace for our diverse workforce and facilitate productive and Through our people, we aim to create a resilient adaptive teams. and adaptive culture—underpinned by personal accountability and corporate responsibility— where diversity of thought is valued.

19 Direct workforce includes over 1,500 direct employees and temporary workers and over 1,400 workers contracted through our partner organisations primarily in customer service, technology and business operations 20 Excludes WestConnex and A25 workforce. WestConnex will be included in FY20 data Our business performance: Our people 33

Belonging and wellbeing

Our workforce has a diverse skillbase so creating a culture We have 37 trained Mental Health First Aid Officers across that supports and develops all of our people is critical to our business and information about these roles is clearly our success. This year we have introduced a ‘continuous displayed in common spaces. listening’ platform and approach, which enables us to engage more regularly with our people to better understand what is important to them. Domestic violence awareness

Measured through this new platform our employee We recognise that we have a role to play in supporting engagement is at 70 per cent and so far employees have a person who may be involved in a domestic violence told us that they want us to remain focused on creating an situation. Our domestic violence support policy—including environment where they can be themselves, feel respected domestic violence leave—is available for all employees. and that they belong. They also want to know they have More than 80 employees have participated in domestic an equal chance to succeed. By gaining regular feedback violence awareness training, and as a business, we from our employees, we can maintain a flexible approach promote anti-domestic-violence campaigns, such as United to these focus areas and ensure we are meeting their Nations International Day for the Elimination of Violence expectations. against Women.

Gender equity Health and safety

We remain committed to gender equity, including pay Everyone at Transurban is expected to help keep equity, within the business. themselves and colleagues healthy and safe, while minimising our impacts on the environment. This year we The work we have done to improve gender equality has introduced Health, Safety and Environment Action Plans, been recognised by the Australian Workplace Gender which required people leaders and their teams to outline Equality Agency (WGEA), which has issued Transurban how they take responsibility for ensuring a healthy and safe with its Employer of Choice for Gender Equality citation environment in their area. for five consecutive years. We review gender pay annually and continue to maintain a pay equity gap of less than In FY19, there were two employee recordable injuries one per cent. equating to an employee recordable injury frequency rate (RIFR) of 0.81 recordable injuries per million work hours. This was above our target of 0.0. The injuries required Mental wellbeing medical treatment for wellbeing and ergonomic-related factors in the corporate environment. All injuries are When it comes to wellbeing, a key area of focus is our investigated and the learnings applied to prevent future employees’ mental wellbeing. To help create a healthy incidents occurring. organisation, we have partnered with Australian group Heads Up, to provide a range of resources for employees While WestConnex is not included in Transurban’s overall and leaders to support good mental wellbeing. metrics for FY19, the employee recordable injuries per million work hours was 0.0. We intend to include In addition, we have run a range of mental-wellbeing WestConnex in our overall safety metrics from FY20. awareness programs including ‘Strengthening Resilient Mindset’ and mindfulness workshops for employees and leaders. Almost 20 per cent of employees attended in FY19.

Total workforce Workforce by gender

15.1% Direct Senior Executives Board

Direct employees employees (excl. CEO) (incl. CEO) For personal use only use personal For

1.5% Contract workers 59% 41% 50% 50% 67% 33% Directly engaged by Transurban

15.2% Male Female Contract workers 68.2% Through partner organisations Sub-contractors such as technology and Major construction projects customer operations Transurban 34 FY19 Corporate Report

Building capability

Continuous learning

Developing the skills and expertise of existing employees to reinforce our strong pipeline of talent is critical to our ongoing success.

This year we launched a new learning platform offering on-demand, digital content on a range of career development topics. This flexible approach to professional learning allows employees to take control of their own development and complete courses at their own pace.

Emerging talent

Through our partnerships with local universities we support emerging talent by offering scholarships, internships and vacation programs as well as a graduate program.

As part of these programs, we promote pathways to ...new encourage women into non-traditional roles such as platform offers engineering and technology. flexible learning This year, 34 female undergraduates completed our options... Females Excelling in Engineering and Technology (FEET) intern program, which offers students hands-on experience and one-on-one mentoring.

Leadership development

We have a range of development activities for our leaders including programs to support emerging and new leaders, 34 female through to continuing development for our senior undergraduates leadership. completed our This year, we continued our partnership with international FEET program. business school, INSEAD, and held our sixth colloquium for senior leaders. This year’s focus was on innovation and lessons learned from other companies and institutions around the world.

Supporting our commitment to gender equality, we also run a Women in Leadership Program, which is now in its fifth year. In FY19, 15 current and emerging female leaders completed the program and an additional 15 started the

program. For personal use only use personal For Our business performance: Our people 35

Case study This is how we flex: what flexibility means to our people

88% of employees believe they have the flexibility to maintain a healthy work-life balance.

Michele

Andrew

Kubilay

Transurban encourages employees to manage their work for games I am able to make use of Transurban’s in a way that makes sense for them. Employees can enter technology to work remotely, in an airport lounge, or into a formal flexible work arrangement, or manage this in a hotel room at any time of the day.” informally with their team. Employees also have the This year, 11 per cent of people who took primary option to purchase up to six weeks of additional leave carer leave were men. One of them is Kubilay who each year through our Lifestyle Leave Policy. works in our People and Culture Team. In Australia, we have received the WORK180 Flex Able ”Having access to primary carer leave is a great Certification and our North American business has been benefit. Flexibility has allowed me to really embrace selected for the 2018 CARE (Companies As Responsive fatherhood and appreciate the new chapter I have Employers) Award for the second consecutive year. created with my family.”

As part of our move into a state-of-the-art corporate Our Group Executive for the NSW Business, headquarters in Melbourne we implemented technology Michele has recently returned from 12 months’ designed to give all our people choice over where and parental leave and has taken advantage of our how they work. flexible work practices to transition back to work.

For personal use only use personal For This is what three of our employees say about working While on parental leave, I received wonderful flexibly at Transurban: support to enable me to stay in touch with and keep across the changes that occurred in the business. Andrew is a Senior Project Engineer working Flexibility has allowed me to re-join the business on major projects in Victoria and has a formal progressively, striking the balance between being a flexible working arrangement which lets him parent and overseeing our busy NSW business. pursue his career as an Australian Football League field umpire while also working at Flexibility is one of the reasons that more than 97 per cent Transurban. of our employees returned to work following parental “I’m not always in the office during the ‘conventional’ leave in FY19. nine-to-five work day. When I travel interstate Transurban 36 FY19 Corporate Report

12 projects progressed with Government partners in FY19

Road User Charging trial east coast, USA

CAV trials in all markets21

Strategic focus areas and UN SDGs relevant to this Government section and industry

Public-private partnerships allow governments to deliver the infrastructure their communities need while focusing their own spending on other vital community services such as public transport, schools and hospitals.

For personal use only use personal For We are proud that our proven track record in the We also work with our industry partners on successful design and delivery of major projects initiatives and activities that contribute to as well as the safe operation of toll roads has transport policy development. made us a partner of choice for governments. In this section, we highlight how we are helping We partner with governments to invest in new governments deliver their transport agendas infrastructure and road upgrade projects—fast and prepare their transport networks for a tracking projects that will benefit motorists and connected and automated future. communities.

21 CAV trials have been completed in Melbourne, Brisbane, Sydney and GWA. GWA CAV trials were conducted in June 2018 Our business performance: Government and industry 37

Partnering

Case study to deliver Over 800 people attended governments’ the WestConnex New M4 transport community day. agendas

Last year, we progressed 12 projects with our local, state and federal government partners (refer to page 49).

We continuously look for opportunities to create mutually beneficial outcomes with our government partners.

Through our partnership on the Inner City Bypass Upgrade (ICB), the Brisbane City Council could reallocate its project budget to other priorities. In addition, the council will save $1 million annually by outsourcing the operations and maintenance of the ICB to us. The project will reap other benefits such as a significant improvement in incident response times and reduced congestion along the corridor and feeder roads.

Similarly in North America our focus on developing transport solutions for the Virginia Government has WestConnex— resulted in a toll-road network that has tripled in size since the 495 Express Lanes opened in 2012. In the past 18 months we announced USD1 billion in Express partnership in Lanes projects. These projects address some of the region’s worst congestion by extending both the 495 and 95 Express Lanes to connect new business practice precincts and commuter routes together. Australia’s largest transport project, WestConnex, will transform Sydney, helping ease congestion in the city’s fast-growing western suburbs and improve connections Mutually beneficial outcomes—one million cubic tonnes of spoil from NorthConnex to the airport, port, inner west and CBD. project will help the Hornsby Quarry become In August 2018, a Transurban-led consortium, a space that the community can use called Sydney Transport Partners (also comprising AustralianSuper, Canada Plan Investment Board and Tawreed Investments) was announced as the preferred bidder for the sale of 51 per cent of the project.

Sydney Transport Partners demonstrated its commitment to partnering with the NSW Government, by highlighting its track record in collaborating with Australian governments to create positive outcomes for

the community. For personal use only use personal For The NSW Treasurer Dominic Perrottet committed to reinvesting the $9.2 billion sale proceeds into other infrastructure across the State.

Transurban has operated WestConnex in partnership with the NSW Government since September 2018.

More than 800 people attended a community day in June with many having a sneak preview of the New M4 Tunnels. Transurban 38 FY19 Corporate Report

Contributing to Case study transport policy development

We regularly contribute to transport policy development through participation in state and federal government inquiries, industry thinktanks, and other thought-leadership activities. In FY19 we responded to several national and state-based inquiries and draft transport strategies including a Federal Government Parliamentary Inquiry into automated mass transit, the Queensland Government’s 30-year Draft Transport Strategy and the National Transport Commission’s phased reform agenda to support the introduction of vehicles with automated driving systems.

The Queensland Parliament’s inquiry into the operation of the state’s toll roads was the most significant inquiry for us in FY19. ...chest clips The inquiry allowed us to demonstrate the value help keep our toll roads provide and the improvements we shoulders stable have made to our customer service and complaint resolution processes. We took this opportunity to in the event of provide elected representatives and the broader a crash... community with technical information and customer data as well as practical case studies about the benefits of our toll roads. Partnering to Road-user-charging trials— east coast, USA progress vehicle The development of road-user-charging policy remains a key focus for our policy engagement with industry and government. safety

Building on our 2016 Melbourne Road Usage Study Report, Transurban is partnering with the I-95 Corridor Our partnership with Neuroscience Research Australia Coalition to conduct a feasibility study of mileage-based (NeuRA) to establish the Transurban Road Safety user-fee charging. The partnership was awarded a grant Centre—brings together the research, business and from the U.S. Department of Transportation—forming government sectors to identify how changes to driver part of the largest multi-state study in the eastern behaviour and vehicle design could reduce road trauma. United States of user-fee charging—and will be the first The first round of research completed in the world-class to integrate dynamically tolled managed lanes. facility looked into the safety of chest clips on child seats. While widely used overseas, currently the clips do not The trial will involve 400 vehicle participants from pass Australian safety guidelines. Virginia and will provide insights into how a road-user charging system could operate in the state. Planning NeuRA researchers put the clips to the test in the and technology development is underway with centre’s specially designed crash lab using state-of- customer trials expected to start late FY20. the art, child-sized-crash-test dummies. The research For personal use only use personal For showed the chest clips helped to keep shoulders stable during a crash and, crucially, they did not come into Encouraging electric vehicles contact with the neck area. in Canada The findings will now go before the Australian Standards Committee, potentially leading to a change The Quebec Ministry of Transport, in partnership with in the decades-old policy and making a demonstrable Transurban, is testing a program that allows free travel improvement to road safety. for electric vehicles on our A25 bridge in Montreal. The program is just one component in a range of policy changes being trialled or implemented by federal and provincial governments to combat climate change. Our business performance: Government and industry 39

Shaping the future of urban transport

To help inform policy discussions, we work with industry and government partners to CAV trials undertake trials of new transport technologies. Through these collaborations, we have built strong relationships with a variety of national and international organisations, including government, auto manufacturing and technology sectors, as well as leading motoring bodies. 12,610 kilometres travelled23 Connected and automated vehicle trials

Industry experts expect connected and automated vehicles (CAVs) to reduce road accidents by 90 per cent as well as improve transport accessibility for vulnerable community members. However, a lot of work needs to be done before these vehicles can be safely introduced on to roads. 17 This year, following trials in Victoria, we conducted trials of partially automated passenger vehicles trialled23 vehicles in NSW (with nine vehicle manufacturers) and in Queensland (with seven manufacturers). Both sets of trials were run in partnership with the state governments and leading industry bodies, including the Queensland Centre for Accident Research and Road Safety and the Queensland Trucking Association. Key findings from these trials pointed to areas such as certain types of line markings and road 8,280 signage that may need to be addressed. observations23 In North America, we partnered with the Virginia Department of Transportation and the US Federal Highway Administration to run connected vehicle trials on our 95 Express Lanes22. Express Lanes provide the ideal testing ground for emerging technologies, especially CAVs, as the lanes offer a controlled, high-speed environment with free-flowing traffic.

Full reports and video commentary from our trials are publicly available on our website.

Work-zone-safety initiatives

We are working with Australia’s leading telecommunications provider, Telstra, on a proof- of-concept for remote-control traffic cones that would remove the need for road workers to manually place or move cones in traffic during road works or when attending incidents. Sensors in rumble strips will test the ability to communicate in real-time with workers via a wearable device such as a vest, which would light up, vibrate and sound an alarm when a vehicle enters the worksite, so they can get out of danger. The proof of concept will be tested in Melbourne and Brisbane later this year.

In North America, we are also exploring how remote and automated technologies could increase safety for workers, and ultimately our customers. We joined forces with Silicon Valley start-up Phantom Auto to test remotely operated vehicles on the 95 Express Lanes. We are also partnering with Virginia Department of Transport, Virginia Tech and DBi Services to advance the development of Automated Truck Mounted Attenuator

technology that could take some road operators out of harm’s way in the future. For personal use only use personal For Through our trials in North America, we are investigating if these technologies could pave the way to fully automated vehicles.

Testing of remotely operated vehicles on the 95 Express Lanes 22 North American CAV trials were conducted in June 2018 23 Data from NSW and QLD CAV trials Transurban 40 FY19 Corporate Report

1,600+ direct suppliers

$1.85B annual managed spend

USD 47M+ spent with certified social enterprises (North America)

Strategic focus areas and UN SDGs relevant to this section Business partners and suppliers

With 17 assets and 12 projects progressed or completed this year, Transurban is in a strong position to make long-term improvements in how we design, construct, operate and maintain our roads. To do this, we rely on a large

network of suppliers. For personal use only use personal For

We know we can achieve more when we work In this section, we highlight how we work with a together, so we collaborate with our partners wide range of business partners and suppliers to mitigate risks, and encourage socially, to deliver better outcomes and drive industry environmentally and economically responsible innovation. business practices. Our business performance: Business partners and suppliers 41

Sustainable procurement

Our sustainable procurement program supports our Connecting suppliers hands-on approach to supplier management and helps better direct our spend in sustainable ways. Our network of suppliers includes a wide range of businesses—from large established commercial The program addresses key government policies and businesses to smaller social enterprises looking to grow. legislative requirements, such as the Commonwealth Modern Slavery Act and the Virginia Small Business and In FY19, we joined Social Traders, who work to develop a Supplier Diversity initiative. connected community between buyers and certified social enterprises to generate jobs for disadvantaged Australians We understand that the recently passed Commonwealth or address environmental issues. Modern Slavery Act may result in a range of responses from organisations across Australia. We believe that it One of the ways we add value to our suppliers is by is a complex issue that will need to be tackled over the connecting them with our other business partners. long term. As such, we will work with like-minded industry partners to avoid taking a fragmented approach to the Outlook Victoria is a social enterprise creating sustainable market. employment and connection opportunities for people with disabilities. In FY19, we started working with our suppliers directly to identify possible exposures to modern slavery and This year, Transurban worked with Outlook Victoria to have joined the United Nations Global Compact Network identify how it could scale its business to meet increasing Australia’s Modern Slavery Community of Practice. We have demand and service a greater variety of industries. also partnered with the Infrastructure Sustainability Transurban connected Outlook Victoria with our business Council of Australia to establish the Modern Slavery Road partner and multinational engineering firm, AECOM to Construction Industry Coalition to work towards a common develop its growth strategy and to consider and progress approach to address shared risks in our supply chains. planning and approval requirements for future use of their site with relevant authorities. Transurban North America has exceeded all major project goals set by the Commonwealth of Virginia to support We have arranged a similar shared-value partnership small business and supplier diversity by utilising certified approach between Ability Works, a social enterprise Disadvantaged Business Enterprise (DBE) and Small providing employment opportunities for people with Women-owned and Minority-owned (SWaM) businesses. disabilities and those facing significant barriers to To date, we have spent more than USD866 million under employment, alongside one of our business partners these programs. Aurecon, a global engineering, design and advisory company. In FY19, we also set DBE and SWaM expenditure targets of USD84 million for the Fredericksburg Extension Project and We will continue to look for opportunities to support both USD100 million for our 495 Northern Extension Project. of these organisations and other opportunities within our supply chain such as provision of skilled support through our employee volunteering program.

Our Procurement Policy and Supplier Sustainability Code of Practice and Sourcing Toolkit are aligned with the International Guidance Standard on Sustainable Procurement (ISO 20400:2017). They are available on our website transurban.com/

suppliers. For personal use only use personal For

Our partnership with Ability Works helps grow employment opportunities for people with disabilities Transurban 42 FY19 Corporate Report

Improving safety in our supply chain

Transurban’s approach to positive Health, Safety and Environment (HSE) outcomes extends 3.66 well beyond our own direct workforce. We collaborate with our supply chain partners on proactive measures to identify potential recordable injuries hazards and incidents to ensure HSE risks are identified and mitigated before an incident occurs. per million hours worked We also record and respond to outcomes of incident investigations and communicate lessons learnt across our regions.

In FY19, a contractor recordable injury frequency rate (RIFR) of 3.66 recordable injuries per million work hours was recorded. This was below our contractor RIFR target of 4.31. Although 128 WestConnex is not included in Transurban’s overall metrics for FY19, the contractor recordable injuries per million work hours was 5.20, which is below their previous target. We intend to include tonnes of waste from WestConnex in our overall safety metrics from FY20. street sweeping and drain cleaning was diverted from Recordable injuries include lost time injuries, which lead a person to lose one or more full landfill and repurposed shifts from work and medical treatment injuries where medical treatment (other than first aid) is required.

New truck standards to protect vulnerable road users

The Victorian Government identified pedestrians, and cyclists’ safety as an emerging issue in 2016 due to an increase in construction trucks in urban areas—a result of the large number of infrastructure projects in Melbourne.

Since then, working groups comprising representatives from Transurban and other industry sectors have met regularly to consider truck standards, route selection, traffic management and community engagement.

An opportunity was identified to develop and introduce new truck safety standards.

A number of changes have now been made to construction trucks on the West Gate Tunnel Project including protective barriers added to the side of the trucks to protect cyclists, blind-spot detection devices such as mirrors, cameras and sensors, audible left-turn warning systems as

well as signs to warn road users of the danger of being too close to the vehicle. For personal use only use personal For Our business performance: Business partners and suppliers 43

Reducing our Case study impacts …targets Building road infrastructure is resource intensive and generates waste which is why the design and identified to construction of our major road projects provides the reduce emissions greatest opportunity to reduce the environmental impact of our business. by 50–95%...

By ensuring we partner with environmentally responsible contractors, we are able to push for, and deliver, better environmental outcomes.

In Australia, a project must be designed to achieve an “Excellent” or above rating under criteria set out by the Infrastructure Sustainability Council of Australia. Contractors are then required to achieve an “Excellent” or above rating for the build of the project. This rating system also includes considerations of sustainability across the life of the asset.

For our major projects in the US, the project procurement process now includes a minimum requirement for contractors to achieve a rating using the Envision infrastructure sustainability rating system.

There is also significant potential to work with our operations and maintenance contractors to reduce the environmental impact related to operating our roads. Rethinking In FY19, Transurban started working with two of our operations and maintenance partners to divert ‘waste’ cement materials that would have ended up as landfill.

In Sydney, Transurban has partnered with Downer to recover and reuse material from street sweeping production and drain cleaning. Over the year about 154 tonnes of material was collected and approximately 128 tonnes Transurban has partnered with a leading Australian was diverted from landfill and ‘repurposed’ into climate change thinktank, Beyond Zero Emissions (BZE), reusable materials including aggregate, sand, organics to set ambitious targets to reduce carbon emissions suitable for composting, ferrous metals, and non- from cement production. ferrous metals. Cement production is a major contributor of carbon The aggregate and sand are used in asphalt production emission, accounting for about eight per cent of at Downer’s Rosehill Asphalt Plant. emissions globally.

In FY19 in Melbourne, Lendlease Services and BZE’s research sets out strategies to reduce emissions Transurban started working with Repurpose It to collect from 50 to 95 per cent by 2030 to 2040. spoil and sediments from CityLink and process it into Strategies include using renewable energy in cleaned and washed sand as well as other aggregates manufacturing processes, greater and more consistent to sell back into the construction industry. This will use of cement alternatives such as fly ash and steel slag divert up to 80 per cent of this collected material from and working with road agencies to review and harmonise landfill annually. specifications. Next steps include detailed engagement with manufacturers, construction companies and road In Montreal, we have reduced our reliance on salt as an For personal use only use personal For agencies. anti-icing agent on the A25 bridge by using natural beet juice. Along with the environmental benefits, beet juice This partnership is part of our commitment to increase is more efficient and longer lasting. One lane-kilometre the use of recycled materials in our roads and work requires only 45 litres of the beet liquid solution, which towards a circular economy. Information about our contains 8kgs of salt, compared to between 80 and annual waste management performance is available in 120kg of salt in more traditional applications. our Sustainability Data and Climate Change Disclosures. Transurban 44 FY19 Corporate Report

2.0% average daily traffic growth

12.3% EBITDA growth24

5.4% growth in distributions to 59 cents per stapled security in FY19

Strategic focus areas and UN SDGs relevant to this section Investors

At Transurban, we recognise that for a business to provide value to investors, it must deliver more than just financial returns.

To ensure our business is in a position to deliver underpins the sustainability of our investment value over the long term, we must take a holistic proposition. Throughout this report, we have approach and create value for each of our outlined how we are working with each of these stakeholder groups. groups to create value for them.

Our relationship with these groups ultimately In this section, we report on our FY19 financial For personal use only use personal For provides us with our social licence to operate— results, capital management activities, and the unwritten contract between a business and outline our near-term priorities, which support the community to support its operations—and cash flow and distributions.

24 Proportional EBITDA excluding significant items Our business performance: Investors 45

FY19 financial performance

Management considers proportional results to be the best indicator of asset performance and a reflection of the contribution from individual assets to the Group’s operating performance.

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.

Note B4 to the Financial Statements presents further detail on the proportional result for Transurban Group, including reconciliations to the statutory result.

Group proportional results

ADT growth 2.0% Revenue growth 11.6% EBITDA growth25 12.3% EBITDA margin26 75.4%

• Group revenue growth of 11.6 per cent was driven by traffic growth and contributions from the acquisitions of WestConnex, the A25 and the additional M5 West interests. • Disciplined underlying cost growth of 2.0 per cent. Excluding foreign exchange impact cost growth of 0.7 per cent27. • Traffic growth of 2.0 per cent driven by a combination of assets impacted by construction, assets in ramp-up and

mature assets across the portfolio. For personal use only use personal For

25 Group EBITDA includes WestConnex, A25 and additional M5 West ownership since financial closes and excludes significant items 26 Excluding WestConnex, A25 and additional ownership of M5 West, Group EBITDA margin is 75.1 per cent 27 Excluding new assets and non-cash maintenance adjustment Transurban 46 FY19 Corporate Report

Market updates 40.4% of Sydney Transurban

ADT growth28 1.6% toll revenue Toll revenue growth 10.4% EBITDA growth29 12.2% EBITDA margin 82.0%

• Toll revenue growth of 10.4 per cent inclusive of New M4 and additional M5 West interests30. • Average daily traffic grew by 1.6 per cent with large vehicle traffic impacted by reduced construction activity in Sydney market. • EBITDA margin increased from 80.7 per cent to 82.0 per cent in FY19.

31.5% of Melbourne Transurban toll revenue ADT growth 3.1% Toll revenue growth 4.2% EBITDA growth29 4.0% EBITDA margin 88.0%

• Toll revenue growth of 4.2 per cent driven by strong traffic growth post the CityLink Tulla Widening. The revenue increase was partially offset by the reduction to customer fees and improved processes that were rolled out as part of the transition to Linkt in July 2018. • Average daily transaction growth of 3.1 per cent. • Large vehicle traffic has increased 5.5 per cent outpacing

For personal use only use personal For car growth. • EBITDA margin largely steady at 88.0 per cent despite reduction in revenue from customer fees.

28 ADT growth in Sydney includes traffic numbers for M4 prior to Transurban ownership and is shown for comparison purposes. M4 ADT is presented on a like-for-like basis to show underlying traffic growth 29 EBITDA presented is exclusive of significant items 30 Excluding M4 and additional M5 West ownership, toll revenue growth was 2.7 per cent. During FY19 Transurban acquired two additional equity interests in the M5 West of 8.24 per cent and 7.14 per cent taking its total equity ownership to 65.38 per cent. Financial close on the additional interests was reached on 18 September 2018 and 3 December 2018 respectively Our business performance: Investors 47

15.6% of Transurban Brisbane toll revenue ADT growth 0.4% Toll revenue growth 2.3% EBITDA growth31 5.4% EBITDA margin 73.1%

• Toll revenue growth of 2.3 per cent was impacted by customer fee reductions with the full impact of changes now in effect. • Average daily traffic increased by 0.4 per cent impacted by disruption from the Gateway Upgrade North (GUN), Logan Enhancement Project (LEP) and Pacific Motorway Upgrade. Excluding Logan and Gateway motorways, traffic growth was 3.2 per cent. • EBITDA margin increased from 71.0 per cent in FY18 to 73.1 per cent in FY19.

North America

ADT growth 2.4% 12.5% of Toll revenue growth 45.0% Transurban EBITDA growth31 61.1% toll revenue EBITDA margin 65.0%

• Greater Washington Area toll revenue growth was 19.1 per cent. • Traffic growth in Montreal strong at 6.0 per cent. • Development in the Greater Washington Area is progressing with financial close on the Fredericksburg Extension completed in July 2019 and the 395 Express Lanes on schedule for customer opening in late 2019. • EBITDA margin increased from 58.6 per cent in FY18

to 65.0 per cent in FY19. For personal use only use personal For

31 EBITDA presented is exclusive of significant items Transurban 48 FY19 Corporate Report

Capital management

Capital summary

• During FY19 $6.9 billion1 of proportional debt was raised, • Maintained high weighted average maturity of 8.3 years further diversifying funding sources—capital markets despite incorporation of new WestConnex acquisition debt issued at a weighted average maturity of 11 years and construction facilities. 2 and weighted average cost of 4.2 per cent . • Debt and equity funding program ongoing to maintain strong investment grade credit metrics.

Figure 8: Corporate debt maturities (at 30 June 2019)3,4

IIO

Working capital facilities USPP MTN 144A Letters of credit facilities

Figure 9: Non-recourse debt (at asset level) maturity profile5,6,7

IIO

TQ D M2 M5 M7 LCT CCT WC M4 WC M5 WC M4-M5 Link 495 95 A25

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 For personal use only use personal For (0.7391 at 30 June 2018 and 0.7015 at 30 June 2019) where no cross currency swaps are in place. CAD debt is converted at the spot exchange rate (0.9771 at 30 June 2018 and 0.9182 at 30 June 2019) where no cross currency swaps are in place 2 Debt calculated on a proportional available facility basis, inclusive of letters of credit. Includes $1.5 billion of acquired WestConnex debt 3 The full value of available debt facilities is shown. Debt is shown in the financial year in which it matures 4 Debt values are shown in AUD as at 30 June 2019. 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 (0.7015 at 30 June 2019) where no cross currency swaps are in place. CAD debt is converted at the spot exchange rate (0.9182 at 30 June 2019) where no cross currency swaps are in place 5 The full value of available debt facilities is shown. Debt is shown in the financial year in which it matures. Scheduled amortisation of less than $25M are not shown for graph purposes 6 Debt values are shown in AUD as at 30 June 2019. CAD, CHF and USD debt is converted at the hedged rate where cross currency swaps are in place. USD debt is converted at the spot exchange rate (0.7015 at 30 June 2019) where no cross currency swaps are in place. CAD debt is converted at the spot exchange rate (0.9182 at 30 June 2019) where no cross currency swaps are in place 7 A$320 million tranche of the 495 debt will be refinanced in FY21, per the financing structure agreed with the sole holder, J.P. Morgan Our business performance: Investors 49

Enhance Deliver Maximise customer and committed performance of community projects operations offerings

Near-term Outlook priorities

The Board has set FY20 distribution guidance of 62 cents While we are working on these projects, it is critical that per security, which is an increase of 5.1 per cent on we listen to, and understand the needs of each of the the FY19 distribution. This is driven by the underlying neighbouring communities as well as minimise the impacts performance of our assets and contribution of of construction work. development assets commencing full operation. Incremental enhancements to our assets and new and The near-term priorities for the business remain as to improved customer offerings will help us get the most out deliver committed projects, maximise performance of our day-to-day operations. In particular, we are tapping of operations and enhance customer and community into technology to develop offerings that will increase offerings. transparency and choice for customers and demonstrate the value of using our roads. In FY20 we will continue to work with our construction partners to advance the eight projects across Australia and North America due for delivery in the next five years (refer to Figure 10). The projects will give customers and communities better and more direct connections around cities, while also generating significant cash flow, allowing us to grow distributions for our investors.

Figure 10: Four projects opened in FY19 and eight to be completed by FY24

Open oee Intercane tae Concession expires 2060 pecte proect competion press anes ortern tension Concession expires 2087

in tae Concession expires 2060

reericsbur tension Concession expires 2087

est ate unne Concession expires 2045

e an ast tae Concession expires 2060

ortonne Concession expires 2048

press anes Concession expires 2087

oan nancement roect Concession expires 2051

e unnes tae Concession expires 2060

atea prae ort Transurban deliered in partnership ith QLD Goernment

Inner it pass Transurban deliered in partnership ith risbane City Council For personal use only use personal For

1 Project completion dates shown are approximations and are subject to final schedules. The Government completion estimate in any given jurisdiction is still the most appropriate estimate for media reporting and commentary 2 Rozelle Interchange is 100% funded and delivered by the NSW Government 3 Project not yet commenced, development framework agreed with Virginia Department of Transportation, project scope and timing still subject to change 4 LEP completion works are underway and expected to be finalised in August 2019 5 The New M4 Tunnels were substantially completed in FY19 and opened to traffic on 13 July 2019 Governance and risk

Governance Page 51

Board of directors Pages 52–53

Risk management

Pages 54–59 50 For personal use only use personal For Governance and risk 51

Governance

The Board32 is accountable to security holders for the Directors are invited to participate in asset or project tours performance of Transurban. The Board’s primary roles are outside the scheduled Board program. These tours are to demonstrate leadership and provide overall strategic an important element of each Director’s induction and guidance for Transurban and effective oversight of ongoing education and enable Directors to maintain the management in implementing our strategic objectives and required deep understanding of Transurban’s activities instilling our values. and operations within each region.

The Board meets as often as necessary to discharge its Throughout the year ended 30 June 2019, Transurban’s responsibilities. Typically, this requires Board members governance arrangements complied with the ASX to attend at least eight scheduled meetings each year, Corporate Governance Council’s Corporate Governance the Annual General Meeting, Committee meetings, and Principles and Recommendations (3rd Edition). unscheduled meetings as required. For more detail please see our FY19 Corporate Governance Board meetings are held in each of our regions. In Statement available on our website at transurban.com/ addition to these meetings, Directors also attend regional corporate-governance. activities, including briefings, asset or project site visits and presentations, and opportunities for employee and Transurban also acknowledges the release of the stakeholder engagement. 4th Edition of the Corporate Governance Council’s Principles and Recommendations, which will take effect for The Board also meets with Transurban’s Executive the year ending 30 June 2021. Transurban intends to early Committee for biannual strategy sessions. adopt the 4th Edition and report against it for the year ending 30 June 2020.

Figure 11: Corporate Governance Framework

Board Delegation Accountability

Assurance and oversight through Reporting

Chief Executive Officer Remuneration Independent Audit and Risk Nomination People and Assurance Committee Committee Culture Committee

External Auditor Board Committees Internal Auditors Executive

Committee For personal use only use personal For

32 The Boards of Transurban Holdings Limited, Transurban International Limited, and Transurban Infrastructure Management Limited as responsible entity for Transurban Holding Trust (together, Transurban) have common directors and meet concurrently, and are collectively referred to as the Board Transurban 52 2019 Corporate Report

Mark Birrell Board of BEc, LLB, FAICD—Age 61 Independent Non-executive Director since May 2018

Member of the Audit and Risk Committee and the Nomination directors Committee Skills and experience Mark is an experienced Director with credentials spanning the private and public sectors. He has deep industry knowledge in the fields of transport, infrastructure and logistics. Mark is Chair Lindsay Maxsted of Post Super Pty Ltd (since 2013) and immediate past President Dip Bus, FCA, FAICD—Age 65 of the Victorian Chamber of Commerce and Industry. His previous roles include Chair of Regis Healthcare Limited (2014 to 2018), Chair and independent Non-executive Director since August Infrastructure Australia, the Port of Melbourne Corporation, 2010 and March 2008 respectively Evans & Peck Limited, and Deputy Chair of Australia Post. He Chair of the Nomination Committee brings extensive legal experience and was National Leader of the Infrastructure Group at Minter Ellison. Skills and experience Mark was the founding Chair of Infrastructure Partnerships Lindsay is Chair (since 2011) and a Non-executive Director (since Australia, the nation’s peak infrastructure sector body, and has a 2008) of Westpac Banking Corporation, and a Non-executive significant public policy background through his earlier service as Director of BHP Group Limited and BHP Group plc (since 2011). a Cabinet Minister in Victoria. He is the Managing Director of Align Capital Pty Limited and the Honorary Treasurer of Baker Heart and Diabetes Institute. Neil Chatfield Lindsay was formerly a partner of KPMG Australia where he was CEO from 2001 to 2007. His principal area of practice prior to MBus, FCPA, FAICD—Age 65 this was in the corporate recovery field managing a number of Independent Non-executive Director since February 2009 Australia’s largest insolvency/workout/ turnaround engagements. Member of the Audit and Risk Committee, the Remuneration, People and Culture Committee, and the Nomination Committee Scott Charlton Skills and experience BSci, MBA (Texas)—Age 55 Neil is an established Executive and Non-executive Director with Chief Executive Officer and Executive Director since July 2012 extensive experience across all facets of company management, and with specific expertise in financial management, capital Skills and experience markets, mergers and acquisitions, and risk management. Scott joined Transurban from Lend Lease, where he held positions as Group COO and Group Director of Operations. Previously Scott Neil is the Chair and a Non-executive Director (since 2011) of held several senior positions across a range of infrastructure Costa Group Holdings Limited and Chair (since 2019) and a Non- entities and financial institutions, including as CFO of Leighton executive Director (since 2018) of Aristocrat Leisure Ltd. Neil is Holdings Limited and Managing Director of Deutsche Bank in also Chair of Launch Housing, a not-for-profit organisation. Australia and Hong Kong. He was previously the Chair (2012 to 2018) and a Non-executive Scott is Deputy Chair of Infrastructure Partnerships Australia Director of Seek Limited (2005 to 2018), a Non-executive Director and is a member of the Monash Industry Council of Advisors, the of Iron Mountain Incorporated (2013 to 2017) and a Non-executive Business Council of Australia and of Roads Australia. Director of Atomos Limited (2018 to 2019). Neil also previously served as Executive Director and the CFO of Toll Holdings.

Robert Edgar

BEc (Hons), PhD, FAICD—Age 73

Independent Non-executive Director since July 2009

Member of the Audit and Risk Committee, the Remuneration, People and Culture Committee, and the Nomination Committee

For personal use only use personal For Skills and experience Bob has over 30 years’ experience as a senior executive, with 25 years at Australia and New Zealand Banking Group in various senior roles. He retired as Deputy CEO of the Bank in 2009.

Bob is a Non-executive Director of Djerriwahh Investments Limited and Linfox Armaguard Pty Ltd. He also serves as Chair of the Hudson Institute of Medical Research and was previously the Chair of Federation Centres Limited and a Non-executive Director of Asciano Limited (2009 to 2016). Governance and risk 53

From left to right

Robert Edgar, Mark Birrell, Scott Charlton, Jane Wilson, Lindsay Maxsted, Christine O’Reilly, Peter Scott, Neil Chatfield and Sam Mostyn

Samantha Mostyn Peter Scott

BA, LLB—Age 54 BE (Hons), MEngSc, Hon FIEAust, MICE —Age 65

Independent Non-executive Director since December 2010 Independent Non-executive Director since March 2016

Chair of the Remuneration, People and Culture Committee and a Member of the Audit and Risk Committee and the Nomination member of the Nomination Committee Committee

Skills and experience Skills and experience Sam has significant experience in the Australian corporate sector Peter has over 20 years’ senior business experience in publicly both in executive and non-executive capacities, in particular in listed companies and a breadth of expertise in the engineering the areas of human resources, corporate and government affairs, and finance sectors. He was formally the CEO of MLC and head of sustainability management and diversity. National Australia Bank’s Wealth Management Division and held a number of senior positions with Lend Lease. Sam is Chair and a Non-executive Director of Citigroup Pty Limited, and a Non-executive Director of Mirvac Group Limited. Peter is a Non-executive Director of Heathley Limited. His pro- She is also a Director of the Sydney Swans Football Club and Chair bono activities include being Chair of Igniting Change Limited, of Carriageworks. She was previously a Non-executive Director of a not-for-profit organisation, a member of the Prime Minister’s Virgin Australia Holdings Limited (2010 to 2019) and Cover-More Community Business Partnership, and a Fellow of the Senate of Group Limited (2013 to 2017). the University of Sydney. He was previously Chair and a Non- executive Director of Perpetual Equity Investment Company Sam is a member of the NSW Climate Change Council, the Limited (2014 to 2017) and Perpetual Limited (2005 to 2017) and advisory boards of ClimateWorks Australia, a Board member of a Non-executive Director of Stockland Corporation Limited (2005 the GO Foundation and of the Centre for Policy Development, to 2016). and Chair of the Australian National Research Organisation for Women’s Safety. Jane Wilson

Christine O’Reilly MBBS, MBA, FAICD—Age 60

BBus—Age 58 Independent Non-executive Director since January 2017

Independent Non-executive Director since April 2012 Member of the Remuneration, People and Culture Committee and the Nomination Committee Chair of the Audit and Risk Committee and a member of the Nomination Committee Skills and experience

Skills and experience Jane has over 20 years’ experience as a Director of companies, government-owned corporations and not-for-profit organisations. Christine has over 30 years’ experience in the finance and

For personal use only use personal For She has considerable experience in finance, banking and infrastructure sectors in various roles including as Co-Head medicine. of Unlisted Infrastructure at Colonial First State Global Asset Management and as Chief Executive Officer of the GasNet Jane is a Guardian of the Future Fund, Australia’s Sovereign Wealth Australia Group. Fund, and a Non-executive Director of Sonic Healthcare Limited (since 2010) and Costa Group Holdings Limited (since 2019). She Christine is a Non-executive Director of CSL Limited (since 2011), is also a Non-executive Director of the General Sir John Monash Medibank Private Limited (since 2014) and Stockland Limited Foundation. Jane was previously a Non-executive Director of Opal (since 2018). She is also a Non-executive Director of Baker Heart Aged Care Limited and of the Winston Churchill Memorial Trust, and Diabetes Institute. She was previously a Non-executive and Deputy Chancellor of the University of Queensland. Director of Energy Australia Holdings Limited. Transurban 54 2019 Corporate Report

Risk management

Identifying and managing risks is a crucial practice for any sustainable business. Effective risk management is essential to delivering value for our stakeholders and requires involvement from employees at all levels of the business.

We proactively implement strategies and contingency plans to manage risk, and assess the effectiveness of these activities through regular reviews so we can make changes where necessary.

Central to our approach is our Enterprise Risk Management (ERM) Framework. This provides guidance on the identification, assessment, management and escalation of risks to ensure that those with the potential to have a material impact on the business, are managed and escalated appropriately.

The ERM Framework is overseen by the Board Audit and Risk Committee and is actively managed by the CEO and Executive Committee in conjunction with senior managers. It includes a Risk Management Policy with guidelines, and outlines the level of risk that Transurban is prepared to accept, tolerate or avoid in the pursuit of its business strategy in a Risk Appetite Statement. The Risk Appetite Statement is reviewed by the Board annually and is critical in guiding our attitudes and behaviours towards risk.

We have a dedicated ERM software system that has been embedded into our daily operations to support the efficient and proactive management of risks. Responsibility for management and reporting of business risks and compliance is delegated to each employee. After identifying and assessing our risks, we then plan and implement responses to address the risks in line with our stated appetite. Our process is captured in Figure 12.

Figure 12: Enterprise Risk Management Process

Monitor and review Validate and improve

Risk Audit and appetite Plan Identify Assess Manage assurance Confirm the Set the What are Analyse and Address Test and

boundaries context the risks evaluate the risks confirm For personal use only use personal For

Communicate Share the risks Governance and risk 55

Figure 13: Our risk identification and review process covers the full spectrum of our activities

Across all of our Short and Both current Internal and operations and long term and emerging external factors activities

Reviewing how we manage risks Measuring the effectiveness of

We undertake formal reviews of emerging, strategic our approach and operational risks and their treatment strategies The ERM Framework is linked to our assurance and on a regular basis. The reviews span all levels of the governance processes—with outcomes from our risk organisation, covering road assets, projects, operations, processes used to define areas of focus for internal functions, and markets from both business and strategic audit. These reviews provide independent and objective perspectives, while also considering internal and external assurance on the adequacy and effectiveness of our influences (refer to Figure 13). internal control environment and recommendations to Any risks identified as material to the business are improve efficiency. escalated to senior management and reported to the Internal Audit is resourced by utilising a co-sourced Board through the Audit and Risk Committee. Material and approach consisting of an external (big four) service emerging risks of note are reviewed quarterly by the Audit provider and a core internal team led by the Head of and Risk Committee. Internal Audit. This approach enables a balance of We also regularly review the effectiveness of our risk external experience and internal knowledge. management approach and culture, making improvements Internal Audit operates under a plan approved annually where appropriate. Recent improvements include by the Audit and Risk Committee and has full access to refinements to the Risk Appetite Statement, Risk all functions, records, property and personnel of the Management Policy and related processes.

For personal use only use personal For Transurban Group. Internal Audit administratively reports Key to the framework’s effectiveness is regular to the CFO and has a direct communication line to the communication and ongoing training and awareness Chair of the Audit and Risk Committee. The results of programs. Learnings are shared across the organisation internal audit activities are reported to the Audit and to facilitate continuous improvement and increase our Risk Committee. business resilience. Transurban 56 2019 Corporate Report

Key risks—threats and opportunities33

Opportunities and Change in opportunity Example management description within year34 responses Harness technology and services to • horizon scanning and emerging technology reviews develop new projects and offerings • technology road map, including identification of suitable Implementation of technology and technology partners and solutions mobile app platforms have presented • strategic initiatives to test and pilot technology adaptations the opportunity to rapidly respond to customer opportunities within the • community and customer engagement market and establish differentiators • continued investment in digital offerings including apps and against our competitors. features. Leverage capabilities to enhance • harness knowledge and experience to drive operations and motorway networks maintenance Opportunity to enhance network • ongoing focus on relationships with stakeholders development, including but not limited • develop new service offerings utilising existing capabilities to core assets. • develop network opportunities based off of a deep understanding of transport needs of our markets. Sustainability initiatives to enhance • Customer Hardship Program and Financial Inclusion Action Plan road user and community experience • managed motorway risks such as pre peak-hour speed limit Opportunity to further pursue reductions to lower risks of rear-end crashes sustainability projects to enhance • Transurban Road Safety Centre at NeuRA research program social and environmental outcomes for communities and social licence • membership with Social Traders to identify opportunities to credentials. increase direct and indirect spend with certified social enterprises • Infrastructure Sustainability (IS) ratings for road assets • research and pilots of new technologies to reduce environmental impacts. New business opportunities in our • focus on the right opportunities aligned to Transurban’s business target markets strategy Entry into new markets has provided • continue to build relationships with partners opportunities to further grow the • demonstrate core capabilities and delivery credibility business and enhance existing assets and operations. • maintain leading understanding of the transport needs of our markets.

Up Down Neutral For personal use only use personal For

33 Transurban’s exposure to financial risks and the policies we have in place for managing that risk can be found in the Financial Risk Management notes—note B15 (refer to page 121). This section discusses our hedging policies, credit risk, interest rate risk and liquidity and funding policies Transurban considers the impacts of climate change as a potential contributing factor to many of our threats and opportunities. For more information on our climate change management strategies and our consideration of transition and physical risks refer to our TCFD on page 59 of this Report and page 20 of the Sustainability Data and Climate Change Disclosures 34 Directional arrows are a general assessment only of the risk change over the year, detailed risk reviews as outlined on page 55 are undertaken regularly to ensure alignment with our risk appetite statement Governance and risk 57

Threats and Change in risk Example management description within year responses Maintaining our social licence • continuous stakeholder listening program to enable practical to operate business responses Failure to live the Transurban values • proactive activities to enhance our social licence to operate when engaging with our stakeholders • program of communication activities that engage all stakeholder or failure to satisfactorily meet their groups. needs could result in a loss of trust in our business, with implications for our reputation and business operations. Cyber security and information • cyber security framework, including data protection management protection and third-party data risk management Failure of IT security controls or • cyber training and awareness programs an ineffective response to a cyber • business continuity planning incident could result in a disruption to operations, damage to equipment and/ • security assessments including penetration and resilience testing. or loss of sensitive or personal data. Unfavourable changes in the market • strategic and emerging risks and mitigations identified and or to operating conditions managed as part of the overall Risk Management Framework Key assumptions relating to the • ongoing regional and asset traffic analysis supplemented by third operating environment and/or budget party data and/or review. forecasts may prove to be incorrect. Failure of technical infrastructure • Transurban Asset Management System (TAMS) and associated Failure to adequately maintain or processes validate activities as required could lead • Supplier and Contractor Management Framework outlines to breaches of concession, possible requirement for regular audits, inspections and quality assurance safety risks and/or reputational damage. assessments of contractors and sub-contractors • asset reviews and Internal Audit Program. Changes in government policies or • contributions to policy discussions through submissions to regulatory interpretations government inquiries and draft strategies A change in government policy could • engagement with at all levels of government—political and impact on the ability to deliver the bureaucratic—to understanding policy positions and the potential business strategy. implications. Delivering our major projects to meet • due diligence throughout procurement and tender processes agreed outcomes • Project Steering groups, Internal Audit Program and Program Contractor performance or behaviour reviews could lead to a failure to deliver projects • Enterprise Risk Management Framework incorporating project risk on time and within budget resulting in reviews reputational issues which could impact on future opportunities. • ongoing focus on relationship with current and potential suppliers including Senior Executive engagement with major contractors. Ensuring the safety and wellbeing of • safety reporting and management systems that enable detailed employees and contractors analytics Due to the nature of some of our work • contractor management and engagement to ensure activities employees, workers and implementation of Transurban minimum requirements other stakeholders could be exposed • ongoing development and enhancement of the Transurban health to harm or suffer wellbeing issues if safety and environment (HSE) culture including delivery of mental For personal use only use personal For business controls fail to be adequate health and wellbeing initiatives or due to third party behaviours. High risk activities include incident response, • HSE training and awareness including practical exercises. construction and operations and maintenance activities.

Up Down Neutral Transurban 58 2019 Corporate Report

Key risks—threats and opportunities

Threats and Change in risk Example management description within year responses Customer and road safety • Australian Road Research Board (ARRB) assessment of the Failure to effectively manage road Australian network to determine International/Australian Road infrastructure and response to incidents Assessment Program (iRAP/AusRAP) safety ratings could impact customer and road safety. • Monash University Accident Research Centre (MUARC) analysis of serious injury crashes on Australian roads • Road Safety Action Plans and Community of Practice (CoP) • continued focus on emergency response capabilities and delivery of emergency management exercises • Transurban Road Safety Centre at NeuRA research program. Dependency on third parties and • due diligence throughout procurement processes critical suppliers • environmental scans and industry engagement Loss of a key strategic supplier due • Supplier and Contractor Management Framework which includes to liquidation, legal action, buyout/ requirements for Supplier Performance Management competitive takeover, or performance issues could lead to a disruption in • ongoing delivery of Sustainable Procurement Program including supply of a critical service to Transurban. preparation for Modern Slavery Act requirements and collaboration with suppliers to respond to potential risks within our supply chain.

Up Down Neutral –

Figure 14: Our whole of enterprise risks

Opportunities Threats

— — — — 1 Almost certain 17 10 — — —

— — — 2 1 Likely 23 18 — — —

— — 6 6 9 Possible 184 130 112 — —

— — — 2 1 Unlikely 291 277 174 67 —

1 — — — — Rare 194 209 135 69 98

Significant Major Moderate Minor Insignificant Insignificant Minor Moderate Major Significant

Numbers = Number of risks in our ERM system For personal use only use personal For Governance and risk 59

Taskforce on Climate-related Financial Disclosures

As a road operator with assets across three countries and in both hemispheres, it is undeniable that the impacts of climate change will influence how we operate our business into the future. These impacts may be caused by significant physical changes to our climate as well as technology, market and reputation changes as global and national economies transition to low-carbon solutions.

Like all threats and opportunities, climate-related impacts are managed using our ERM Framework.

Consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFDs), we have reviewed our climate management processes to help us better identify, manage and respond to our most material climate impacts.

A key component of this review was using scenario analysis to confirm transition and physical risks that will have a short, medium or long-term impact on our operations. To make sure the full breadth of possible physical and transition risks were considered, three scenarios were selected and developed with advice from external experts (refer to Figure 15).

A summary of the review and our performance against the four TCFD categories: Governance, Strategy, Risk Management, and Metrics and Targets—as well as a description of the material threats and opportunities are included in the Sustainability Data and Climate Change Disclosures.

Addressing the TCFD recommendations is a key initiative in our recently revised Sustainability Strategy. This includes our continuing support of climate mitigation efforts and initiatives that reduce the emissions from our operations and contribute to our science-based emissions reduction target to reduce Scope 1 and Scope 2 greenhouse gas emissions by 52 per cent by 2030.

Figure 15: TCFD Scenarios

Scenario TCFD scenario description 1.5 degree increase: Government-led rapid intervention to curtail greenhouse gas emissions with a government-led transition high degree of ‘penalty-led’ regulation. The worst physical impacts of climate change are avoided in this scenario. Consumption declines. 2 degree increase: Business-led greenhouse gas emission reduction, with supportive ‘incentive-led’ industry-led transition and market-based policy environment. Consumption increases, but it is only on a circular and green economy basis. Funding and investment supports new technologies that reduce use and demand for high carbon options, increase efficiencies and decreases resource consumption. 4 degree increase: Business as usual, with very limited regulation beyond that existing in 2018. current trajectory Severe physical climate change impacts build from 2020. This means that consumption increases until 2025 and then starts a gradual but significant decline as systems collapse, supply routes are disrupted and health and safety issues take

precedence over discretionary items. For personal use only use personal For 60 Directors’

Report For personal use only use personal For Directors’ Report 61

Directors’ Report

The Directors of Transurban Holdings Limited (‘the Company’, ‘the Parent’ or ‘THL’) and its controlled entities (‘Transurban’, ‘Transurban Group’ or ‘the Group’), Transurban International Limited and its controlled entities (‘TIL’), and Transurban Infrastructure Management Limited (‘TIML’), as responsible entity of Transurban Holding Trust and its controlled entities (‘THT’), present their report on the Transurban Group for the financial year ended 30 June 2019 (‘FY19’).

The controlled entities of THL include the other members of the stapled group, being TIL and THT.

The Directors’ Report for FY19 has been prepared in accordance with the requirements of the Corporations Act 2001. The Remuneration Report on pages 64 to 85 of this Corporate Report forms part of the Directors’ Report.

Principal activities Company secretaries

The principal activities of the Group during the year Amanda Street and Julie Galligan are Company Secretaries were the building and operation of toll roads in Sydney, of THL, TIML and TIL. Melbourne and Brisbane, Australia, as well as in the Greater Washington Area and Montreal in North America. Amanda Street Further details of our activities are on pages 10 to 11 of LLB (Hons), BComm this report. Amanda joined Transurban in September 2008 and was appointed as Company Secretary in February 2011. Operating and financial review Before joining Transurban, Amanda was Assistant A review of the Group’s operations and the results of those Company Secretary at AusNet Services, and Senior operations during the year, including likely developments in Corporate Counsel at National Australia Bank. She has over future financial years, are on pages 12 to 59 of this report. 20 years of legal, company secretariat and other relevant Further details of the Group’s results are provided in the experience. Prior to her in-house work, Amanda was a Financial Statements on pages 88 to 185 of this report. solicitor specialising in M&A work with Australian law firm King & Wood Mallesons.

Directors’ details Julie Galligan

The Board of THL, TIML and TIL have common Directors. LLB, BA The names of Directors who served during or since the end of FY19 are: Julie joined Transurban in November 2008 and was appointed as General Counsel in February 2012. Julie has • Lindsay Maxsted (Chairman) over 20 years of legal experience in private practice and • Scott Charlton (Chief Executive Officer) in-house roles in both Australia and the United Kingdom. • Mark Birrell Prior to joining Transurban, Julie worked in-house at • Neil Chatfield Associated British Ports and at law firms, SJ Berwin LLP and MinterEllison. • Robert Edgar

• Samantha Mostyn For personal use only use personal For • Christine O’Reilly • Peter Scott • Jane Wilson • Rodney Slater (retired 11 October 2018)

Details of each Director’s appointment, qualifications, experience and special responsibilities, together with their recent directorships, are on pages 52 to 53. Transurban 62 FY19 Corporate Report

Directors’ meeting attendance

The Boards of THL, TIML and TIL have common Directors and meetings are held concurrently. The number of meetings of the Board and each Board Committee held during FY19, and the number of meetings attended by each Director, are set out below:

Remuneration, People and Board Audit and Risk Culture Nomination Special Purpose of Directors Committee1 Committee2 Committee3 Sub-Committee4 Attended Held Attended Held Attended Held Attended Held Attended Held Lindsay Maxsted (Chairman) 11 11 6 # 5 # 3 3 3 3 Scott Charlton (CEO) 11 11 6 # 5 # 2 # 3 3 Mark Birrell 11 11 4 # 4 # 3 3 – – Neil Chatfield 10 11 6 6 5 5 3 3 1 1 Robert Edgar 11 11 6 6 5 5 3 3 – – Samantha Mostyn 11 11 3 # 5 5 3 3 – – Christine O'Reilly 11 11 6 6 5 # 3 3 1 1 Peter Scott 11 11 6 6 4 # 3 3 1 1 Jane Wilson 11 11 1 # 3 5 3 3 – – Rodney Slater (retired 11 October 2018) 5 5 – # – # 1 1 – –

# Not a member of the relevant Committee 1 L Maxsted, S Charlton, M Birrell, S Mostyn and J Wilson were not members of the Audit and Risk Committee but attended meetings as observers during the year 2 L Maxsted, S Charlton, M Birrell, C O’Reilly, P Scott were not members of the Remuneration, People and Culture Committee but attended meetings as observers during the year. S Charlton was excluded from discussions involving his remuneration during meetings that he attended 3 S Charlton was not a member of the Nomination Committee but attended meetings as an observer during the year 4 A number of Board sub-committees were formed during the year for special purposes

Distributions Events subsequent to reporting date

A distribution of 30.0 cents per stapled security will be paid for Details of any events that have arisen from 30 June 2019 to the the six months ended 30 June 2019 on 9 August 2019. This takes date of signing this report that has significantly affected, or may the total distribution for FY19 to 59.0 cents per stapled security, significantly affect, the Group’s operations, the results of those of which 3.0 cents will be fully franked. Further details of FY19 operations, or Group’s state of affairs, in the future years are distributions are provided in note B10 of the financial statements. provided in note B30 of the financial statements.

Significant changes in the state of affairs Indemnification and insurance of Directors

The financial position and performance of the Group was and officers particularly affected by the following transactions during Each officer (including each Director) of the Group is indemnified, the reporting period: to the maximum extent permitted by law, against any liabilities • Acquisition of additional equity interest in Interlink Roads incurred as an officer of the Group pursuant to agreements with (M5 South-West Motorway) the Group. Each officer is also indemnified against reasonable costs (whether legal or otherwise) incurred in relation to relevant • Group equity issuance in September 2018 to support proceedings in which the officer is involved because the officer is investment in WestConnex through Sydney Transport or was an officer. Partners JV • West Gate Tunnel Project legislation and associated The Group has arranged to pay a premium for a Director’s and officer’s liability insurance policy to indemnify Directors and For personal use only use personal For parliamentary consents officers in accordance with the terms and conditions of the policy. • Commercial close of the Fredericksburg Extension Project. This policy is subject to a confidentiality clause which prohibits Further information is provided in note B2 of the disclosure of the nature of the liability covered, the name of the Financial Statements. insurer, the limit of liability and the premium paid for this policy. Directors’ Report 63

Environmental regulation

The Group’s operations are subject to environmental regulation under both Commonwealth and State legislation. The Group is committed to achieving a high standard of environmental performance. The Sustainability Strategy—available on our website transurban.com—outlines our objectives, while our Risk Management processes provide regular monitoring of environmental exposure and compliance with environmental regulations.

Based on the results of enquiries made, the Board is not aware of any significant breaches during the reporting period.

Non-audit services and auditor independence

PwC continues in office in accordance with section 327 of the Corporations Act 2001. The Group has an “External Auditor Independence” policy that is intended to support the independence of the external auditor by regulating the provision of services by the external auditor. The external auditor will not be engaged to perform any service that may impair or be perceived to impair the external auditor’s judgment or independence.

The Board has considered the position and, in accordance with advice received from the Audit and Risk Committee, is satisfied that the provision of the non-audit services during the reporting period is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by PwC did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• The Audit and Risk Committee reviewed the non-audit services to ensure they did not impact the impartiality and objectivity of the auditor. • None of the services undermined the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or a decision making capacity for the Group, acting as advocate for the Group or jointly sharing economic risk and rewards.

Details of the amounts paid for non-audit services are provided in note B33 of the Financial Statements. A statement of independence regarding the provision of non-audit services by the external auditor is provided on page 86 of this report.

Rounding of amounts

The Group is of a kind referred to in Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that Instrument to the nearest million, or in certain cases, to the nearest dollar.

This Directors’ Report is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors:

Lindsay Maxsted Scott Charlton Director Director

Melbourne

7 August 2019 For personal use only use personal For 64 Remuneration

This Remuneration Report Report forms part of the Directors' Report commencing on

page 60. For personal use only use personal For Remuneration Report 65

66 Introduction from the Chair of Remuneration, People and Culture Committee

68 76 Who is covered How variable by this report remuneration is structured

69 Our remuneration 79 governance framework Minimum at a glance security holding

70 79 Our executive Service remuneration strategy agreements

72 80 For personal use only use personal For Our business Non-executive performance Director remuneration

73 Executive KMP 82 remuneration outcomes Statutory tables TransurbanTransurban 3 201966 RemunerationFY19 Corporate Report Report

Introduction from the Chair of the Remuneration, People and Culture Committee

Dear security holder The Remuneration, People and Culture Committee provides oversight of the performance and remuneration of Transurban’s On behalf of the Board, I am pleased to introduce the CEO and other Executive Committee members, along with the Transurban Remuneration Report for the year ended 30 June Group remuneration framework and incentive schemes. Our 2019. philosophy is to ensure that financial reward balances tangible The report aims to provide our investors and other stakeholders performance with appropriate risk taking in order to create with an understanding of the links between Transurban’s alignment with our various stakeholder groups. strategy, our Group’s performance and Executive remuneration, The key principles underpinning our remuneration framework as well as the framework we have in place to ensure effective include: governance of remuneration matters. It provides a comprehensive overview of the remuneration strategy and  incentives based on financial measures and strategic framework and the resulting performance and remuneration objectives that are critical to sustained organisational growth outcomes for our Key Management Personnel (KMP). and success

It has been another outstanding year for Transurban with  due consideration of business and operational risk and the significant achievements across all aspects of the business. This Group’s values and culture through the design of performance year built on a period of sustained growth for Transurban, and objectives, clawbacks and the exercise of Board discretion included refocusing the business on three near-term priorities: delivering our committed projects; maximising the performance  incentives that provide sufficient stretch and motivation and of operations; and enhancing customer and community also align the interests of executives to those of security offerings. holders  a suitable balance between fixed, on target and at risk pay to Our major achievements in FY19, which are expanded upon reward outperformance throughout this report include:  vesting periods for deferred incentives and remuneration  Total Shareholder Return (TSR) of 31 per cent practices and outcomes that are fair and reasonable, taking  maintaining a strong balance sheet during a period of into account stakeholder expectations. significant portfolio development Over the past 12 months, we have conducted a comprehensive  continued distribution growth with FY19 distributions totalling program of listening and would like to thank those stakeholders 59 cents per stapled security (5.4 per cent growth year-on- who have taken the time to share their views regarding year) remuneration practices at Transurban. We continue to review our remuneration strategy and framework, taking into  1.7 million trips made on our roads each work day, collectively consideration such feedback, market expectations and saving customers 374,000 hours in travel time regulatory developments.

 Proportional EBITDA growth (excluding significant items) of 12 We have also taken the opportunity to refresh this report. We per cent and 2 per cent underlying cost growth reflecting have included a number of new sections designed to improve discipline in managing near-term priorities clarity and transparency. This includes a more detailed overview of our remuneration governance framework, remuneration  acquisition of 51 per cent of WestConnex in Sydney with our strategy and disclosure of the CEO’s individual Key Performance consortium partners Indicators (KPIs).  WestConnex and A25 performing ahead of investment cases We have also expanded our disclosure on methodologies providing evidence to support sound investment decisions relating to target setting, including: which metrics are used and  CityLink concession extension contributing more than three why; how hurdles are determined to ensure sufficient stretch;

For personal use only use personal For years to the Group’s weighted average concession length and what factors the Committee and the Board take into consideration when determining performance and remuneration  four major projects opened to traffic: WestConnex New M4 outcomes. Tunnels in Sydney; and the Logan Enhancement Project, Gateway Upgrade North and Inner City Bypass Upgrade in Brisbane

 dedicated customer hardship team, Linkt Assist, established and $15 million of fee reduction and process improvement initiatives delivered

4 RemunerationTransurban emunerationReport eport 67

Alignment between performance and remuneration

Executive KMP Three-year performance to FY19

Short Term Incentive (STI) The T plan vested on ugust performance n determining T remuneration outcomes the oard assesses period ul to une with the following results a number of factors including actual financial performance  T Transurban ranked th highest out of companies measured against targets and individual s ndividual s percentile include delivery against the Group’s key focus areas of Strategy, Customer eople and eadership Operations and  C cumulative average annual growth rate in C per evelopment securit over the performance period The target range was FY19 Financial Performance (actuals and % to target) to C growth per securit  roportional ET of m which was of target What did Executives receive

 et Costs of m which was of target reflecting of units vesting the discipline in managing nearterm priorities T  E of of target C Total What did Executives receive

T outcomes ied remuneration reviews were conducted with a small  the CEO received of his T opportunit number of adustments made Overall there was no general increase in remuneration for Eecutive  other Eecutive received between and

and with the eception of ndrew ead who received a onceoff incentive of of TEC Non-executive Directors s in there are no changes to our oneecutive irectors’ fees The net oneecutive irector fee review is scheduled Long Term Incentive (LTI) for ecember

Two performance measures underpin the T plan including relative Total hareholder eturn T against a bespoke comparator group and ree Cash low C each with an eual s a oard we continue to set targets that reflect our focus on weighting delivering returns to investors and longterm sustainable business performance trust ou find this emuneration efore determining an vesting outcome the oard reviews in eport transparent and informative in eplaining our detail the actual performance against the budget underpinning remuneration structure and approach the targets This review enables the oard to eercise its udgement in determining an vesting outcome b considering

 whether there was sufficient and challenging stretch

 ke reasons for an variance

 if adustments ma be appropriate amantha ostn Chair emuneration eople and Culture Committee urther detail regarding C outcomes is on page of this report This details specific factors relating to management activities contributing to operational efficienc improved This report has been prepared and audited in accordance with customer eperience portfolio development activities and section 300A of the Corporations Act 2001 (Corporations Act) funding strateg

For personal use only use personal For

Transurban 5 euneration eport Transurban 68 FY19 Corporate Report

Who is covered by the Report

his report covers the key anageent personnel of ransuran ho have the authority and responsiility for Changes to Key Management Personnel planning, directing and controlling the activities of the Group Rodney Slater, Non-executive Director either directly or indirectly his includes oth the ecutive as ell as oneecutive irectors odney Slater retired fro his position as a oneecutive The following table lists the Group’s KMP during FY19. ll irector on ctoer held their positions for the duration of unless otherise Andrew Head, Group Executive NSW Development stated ransuran and its consortiu partners ere successful in the Non-executive Directors KMP id to acuire a per cent stake in estonne on ugust Lindsay Maxsted, Chair ndre ead as appointed and seconded to the role of of estonne on Septeer folloing the Mark Birrell financial close of the acuisition on Septeer Neil Chatfield s of estonne, ndre reports to the estonne Robert Edgar oard and his ey erforance ndicators relate solely to the estonne Group rather than the roader ransuran Samantha Mostyn usiness hile ndre reains an eployee of ransuran, he Christine O'Reilly no longer has authority and responsiility for planning, directing or controlling the activities of the ransuran Group and as a Peter Scott result, he no longer eets the definition of a ransuran Rodney Slater (until 11 October 2018) Michele Huey, Group Executive NSW Jane Wilson ichele uey returned fro parental leave on Septeer

to the peranent position of Group ecutive e South ales Executive KMP

Scott Charlton, Executive Director and Chief Executive Officer (CEO)

Tony Adams, Group Executive Project Delivery

Jennifer Aument, President North America

Wesley Ballantine, Group Executive Victoria and Strategy

Andrew Head, Group Executive New South Wales Development (until 27 September 2018)

Michele Huey, Group Executive New South Wales (from 17 September 2018)

Sue Johnson, Group Executive Queensland

Lisa Tobin, Group Executive Technology

Adam Watson, Chief Financial Officer For personal use only use personal For 6 RemunerationTransurban 19 eunerationReport eport 69

Our remuneration governance framework at a glance

et an oeree te impementation o te Remuneration oi

Assists the Board in fulfilling its responsibilities in relation to remuneration, people The Committee may seek and consider advice an uture poiie an pratie rom inepenent remuneration onutant The Committee is responsible for reviewing, and where appropriate making ere appropriate n aie rom reommenation to te oar on onutant i ue to uie te ommittee and the Board, but does not serve as a remuneration o oneeutie utitute or torou onieration remuneration or te an oter roup enior eutie oneeutie iretor remuneration uet or a empoee rotoo are in pae or te inepenent • remuneration strategies, policies, practices, and disclosures generally, in enaement o remuneration onutant relation to the context of the remuneration framework. an te proiion o remuneration reommenation The Committee comprises Non-executive Directors, all of whom are independent. The current members are Samantha Mostyn (Chair), Robert Edgar, Neil Chatfield, During FY19, consultants provided an ane ion urter etai rearin te ommittee are et on pae a benchmark data only to the Committee. matter of practice, the Chair of the Board (Lindsay Maxsted) and the Chair of the o urter remuneration reommenation Audit and Risk Committee (Christine O’Reilly) also attend the Committee meetings. reatin to ere proie Committee papers are provided to all members prior to meetings to enable timely, considered and effective decision making. e ommittee ma reuet aitiona inormation rom manaement or eterna aior ere reuire e ommittee ue a rane o input en aein perormane an outome of Executive KMP, including both what and how results have been achieved. Detailed performance assessments as well as audited financial results, external remuneration benchmarking and an overarching view to the organisation’s values and risk profile are taken into account. The Committee and the Board review relevant information and exercise discretion, and may adjust proposed remuneration outcomes, including application of malus and clawback.

Provide management information on financial, customer and risk matters which may impact remuneration. Where appropriate, the CEO and the Group Executive, People and Culture attend Committee meetings, however they do not participate in

formal decision making or in discussions involving their own remuneration. For personal use only use personal For

TransurbanTransurban 7 1970 eunerationFY19 Corporate eport Report

Our executive remuneration strategy

t Transurban our reuneration strateg is designed to support and reinfore our business strateg inluding sustainable longter growth. The reuneration oponents that are at ris reflet the suessful eeution of that strateg in both the short and long ter. ur strategi driers are refleted in our T and T perforane easures so that business perforane shareholder outoes and eeutie reuneration are diretl aligned.

Our purpose To strengthen communities through transport

Our strategy Provide sustainable transport solutions that offer choice, reliability, safety, transparency and value

Our focus areas Stakeholder engagement Optimal networks Delivery and operations Disciplined investment

Remuneration A total remuneration framework designed to attract, motivate and retain the most skilled, experienced and capable executives by rewarding strategy them for delivering on our business strategy and creating long-term, sustainable value for stakeholders

Remuneration Aligns the interests of our Attracts, motivates and retains Balances financial and non- Pays fairly for operational principles people with stakeholders the best people in the market financial priorities around delivery and longer-term culture, risk appetite and values value creation

Remuneration Fixed remuneration At risk Outperformance components (and Target performance as defined by a Long-term business performance delivery combination of individual and group KPIs has measures determine opportunity for mechanisms) the potential to achieve a 100% outcome. security grants Opportunity for outperformance exists

Salary including statutory Short Term Incentive (STI) Long Term Incentive (LTI) superannuation Annual incentive awarded 50% in cash and Annual award granted as three-year 50% as two-year deferred securities performance rights

Purpose Set competitively in relation to the Current year performance Long-term sustainable performance external market; designed to attract and Designed to reward for performance Aligns performance focus with longer retain the most appropriately skilled and against annual, year-on-year business term business strategy and security experienced people in the market objectives and key performance holder returns; the three-year indicators (KPIs); deferral provides performance period provides additional retention and clawback additional retention and clawback optionality optionality

Link to Individual key role accountabilities, Provides for differentiation of pay based Motivates the consideration of longer-term performance responsible for delivering on local on both individual contribution and implications of present-day decisions priorities aligned to the business strategy overall business performance

Performance Key role accountabilities, size and complexity Financial Relative Total measures weighed up against individual responsibilities, Proportional EBITDA (20%), Net Costs (20%) Shareholder Return (TSR) (50%) knowledge, skills and experience Non-Financial Free Cash Flow (FCF) per security Individual KPIs (50%) growth rate (50%) Health Safety Environment (10%)

Performance Measures are clearly aligned to security Measures are clearly aligned to security Relative TSR: Board review of companies targets / holder returns and value creation holder returns and value creation included in comparator group hurdles FCF: budget-setting process, plus Board considerations as to quantifiable risks and opportunities

Further Minimum security holding requirements STI deferral into securities Measures are clearly aligned to security For personal use only use personal For alignment to for Group CEO and KMP (equal in value to holder returns and value creation security holders fixed annual remuneration excluding superannuation; five-year period to accumulate)

Governance The Board holds discretion in regards to the setting of targets and Strict protocols are in place for engaging independent hurdles, as well as decisions regarding performance and remuneration consultants and advisors remuneration outcomes; this includes taking into account any relevant significant items 8 RemunerationTransurban 19 eunerationReport eport 71

Overview of executive remuneration framework

ar ar ar

ae aar an uperannuation

a

euritie eerre or to ear ooin te perormane perio uet to toear erie reuirement an oar iretion

o aar ae on ra T perormane meaure at te en o ear tree

o aar ae on r perormane meaure at te en o ear tree

u T aar ss a n ar r sub ab rran us an sr arranns

ar ar ar roranc prio

Executive KMP remuneration

The reuneration i is designed to ahiee a balaned reward for ahieeent of shortter obeties and the reation of longter sustainable alue. The reuneration i for FY19 for target perforane 1 esting of T and T for eutie KMP is outlined in the diagra to the right.

T is set with referene to the aret edian using the 1 as the priar referene. euneration paages . inluding T leels are reiewed b the euneration People . and ulture oittee taing into onsideration an indiiduals . . role eperiene and perforane as well as releant ie annua remuneration ariae a ariae eerre ariae oparatie aret data proided b reuneration onsultants. T leels are also reiewed on a hange in role. 1. For this period, Andrew Head’s target remuneration mix was 45% fixed annual remuneration, 11.5% ariable T deferred 11. T ash and ariable T with a aiu T opportunit euialent to 1 of T.

Total ploee opensation—inludes base salar and statutor superannuation For personal use only use personal For TransurbanTransurban 9 172 emunerationFY19 Corporate eport Report

Our business performance

Financial highlights for FY19

The Group’s toll road portfolio deliered strong A growth drien inreased traffi, toll prie esalations aross our networs, new auisitions and disiplined ost ontrol.

he roup reorded proportional A exluding signifiant items of ,1m for the finanial ear ended une 1, an inrease of 1.% on the prior orresponding period.

Overview of Group performance

The variable (or ‘at risk’) remuneration of the CEO and other senior executive KMP is linked to the Group’s performance using measures ased on the operating performane of the usiness. he tale elow shows the Group’s performance over the past fie finanial ears inluding metris used to determine omponents of and awards.

Five-year performance FY19 FY18 FY17 FY16 FY15

Underlying proportional EBITDA $m 2,016 1,796 1,629 1,480 1,289

Proportional net costs excluding significant items $m 450 406 380 342 270

Free cash per security Cents 57.12 56.8 59.63 46.8 40.2

Distribution paid per security Cents 59.0 56.0 51.5 45.5 40.0

Security price at 30 June1 $ 14.74 11.97 11.85 11.99 9.30

Market capitalisation $b 39.43 26.63 24.32 24.46 17.80

TSR at 30 June % 31 6 4 35 32

1. he opening share prie in F15 was .. . he F1 free ash flow of 5.1 ents per seurit inluded 4. ents per seurit relating to a apital release from the orthestern oads roup and . ents per seurit from a apital release from ransuran ueensland. xluding these apital releases, the 1 free ash flow was 45. ents per seurit. . he F1 free ash flow of 5. ents per seurit inluded .5 ents per seurit relating to a apital release from orthestern oads roup. xluding this apital release, the F1 free ash flow was 51.1 ents per seurit.

For personal use only use personal For 10 RemunerationTransurban emunerationReport eport 73

Executive KMP remuneration outcomes

STI outcomes  hether budetar assumptions that ere made hen T aards are determined ith reference to an assessment of settin performance tarets remain correct and hether performance aainst individual KPs () and Group conditions are potentiall better or orse hen compared performance measures () hen the oard and the ith those assumptions Committee consider the performance aainst each element a number of factors are taken into account that ma result in the  the deree of difficult and complexit associated ith exercise of oard discretion for the benefit or detriment of the achievin the tarets as related to both the internal and emploees n assessin hether to exercise discretion for an external environment of these factors the oard ill have reard for the interests of securit holders or example Taret performance hich is defined b a combination of individual and Group KPs provides the potential to achieve a  prevailin external business and economic factors beond of T opportunit Current KMP can achieve up to the control of the business and hich ma impact of the taret T opportunit based on sinificant performance outperformance to areed tarets and measures and alinment to Group values  unforeseen factors that ma not have been knon at the beinnin of the performance period but hich are relevant Transurban’s strategic priorities are cascaded via the CEO’s KPIs to performance over the performance period to other Executives in combination ith other functional measures The oard assessed Group performance and the CEO’s KPIs as follos (KPs that are commerciall sensitive have been excluded)

FY19 CEO Individual KPI outcomes (contributes 50% to total STI outcome)

Priority / Area / Measure Performance

Strategy  Stakeholder initiatives implemented including trip compare tool, decision-point signage, social investment program  Stakeholder listening  Support for customers in financial hardship assistance implemented (Linkt Assist)  West Gate Tunnel (WGT) strategy /  Community trust benchmark with three-year stretch target achieved in 12 months CityLink concession  WGT/CityLink concession legislation achieved with concession extended by 10 years

Customer  Transitioned to one national brand, including single customer website, mobile app and alignment of fees and products  Linkt brand launch  Improvements in customer service and digital experience including simplifying and streamlining including app functionality  Customer listening  Significant improvement in key customer metrics relative to stretch targets

People and leadership  Developed the capability and breadth of senior leaders through new programs and exposure to external markets and operators  Enterprise leadership  Implemented digital learning platform, expanding scope and scale of learning opportunities  Workforce capability  Achieved WGEA Employer Of Choice for Gender Equity citation for fifth consecutive year; continued focus on gender pay  Diversity and gender pay equity equity and Women in Management

Operations  Completion of the following: WestConnex New M4 Tunnels in Sydney and the Logan Enhancement Project, Gateway Upgrade North and Inner City Bypass upgrade in Brisbane  In-flight road projects  Multiple projects progressing satisfactorily across all markets: WGT, NorthConnex, 395, FredEx, WCX Stage 2 and 3  Tolling as a service  Tolling as a service proposition progressing  Global Enterprise Resource Planning (ERP) system  ERP system implemented

Development  WCX bid successful including Australian Competition and Consumer Commission and Foreign Investment Review Board approvals and successful capital raising  WestConnex (WCX) bid  WCX integration ahead of acquisition case  New market opportunities  Disciplined investment assessment in identification of new market opportunities For personal use only use personal For  US development  Express lane development framework agreed on 495 Northern Express Lanes Extension project  395 Express Lanes commissioning underway  Design build procurement completed for Fredericksburg Extension

n assessin overall performance the oard concluded that the CEO has delivered another ear of stron performance assessin his individual performance outcome to be mportantl durin this ear he achieved a number of sinificant outcomes includin the successful C bid and interation and the Citink concession extension n addition the CEO continued to drive investment in stakeholder initiatives and e continued to see an uplift in customer outcomes and communit enaement that delivered benefits for all our stakeholders TransurbanTransurban 11 74 eunerationFY19 Corporate eport Report

FY19 Group measures outcomes (contributes 50% to total STI outcome)

Measure Target Performance STI Outcome Commentary %

Proportional EBITDA (20%) $1,963m $1,939m 27.7 Excluding significant items, budget for discretionary research and development initiatives, WCX, and additional M5 acquisitions that occurred during the year.

Proportional net costs (20%) $473m $450m 59.9

HSE (10%) (refer below for detail) 88.3 17.7

Overall performance / Group 105.3 outcome

HSE in detail Target Score Outcome

HSE leadership (60%) 3.50 3.23 86.5 51.9 Leader and employee accountability, participation and improvements against HSE system plans and targets

Recordable Injury Frequency Rate 0.00 0.81 57.4 5.7 RIFR: recordable injuries (fatalities, lost time and (RIFR)—employees (10%)1 medical treatment injuries) per million work hours.

Recordable Injury Frequency Rate 4.31 3.66 150.0 15.0 As above —Contractors (10%) 1

Road Injury Crash Index (RICI) (10%) 3.92 4.71 56.6 5.7 RICI: serious road injury (requiring medical treatment or where emergency medical care is required, other than first aid) crashes per 100 million vehicle kilometres travelled.

Road Safety Action Plans (10%) Action plans in place 100.0 10.0 Road Safety Plan actions implemented and actions and tracking to target tracking to target.

Total HSE 88.3

In the event o an epoee or contractor atait the TI outcoe or the corresponding I i be ero or a Eecutive KP and TI eigibe epoees

The TI perorance outcoes and aards or the CEO and current Eecutive KP are detaied in the ooing tabe

STI outcome (%) STI awarded3 ($) STI forfeited (%)

Executive KMP Individual KPIs Total2

S Charlton 100.0 102.7 2,360,950 –

T Adams 95.0 97.5 490,020 2.5

J Aument1 130.0 133.4 764,700 –

W Ballantine 85.0 87.3 467,670 12.7

M Huey 85.0 87.3 283,160 12.7

S Johnson 95.0 97.5 457,350 2.5

L Tobin 95.0 97.5 457,350 2.5

A Watson 115.0 118.0 711,820 –

ennier uent is reunerated in oars er aarded TI has been transated to ustraian doars using the echange rate o at une

The tota TI perorance outcoe is cacuated Individua TI outcoe Individua TI outcoe roup outcoe The Group’s percentage outcome is For personal use only use personal For is paid in cash and is aarded in securities that are subect to a toear restriction period ooing the end o the perorance ear

ndre ead as Eecutive KP or the period o u – ept As part of the company’s growth strategy over the past two ears the oard approved a speciic incentive arrangeent in relation to Andrew Head’s role eading deveopent opportunities in or this period he received an TI aard o representing his aiu TI opportunit euivaent to o TEC

12 RemunerationTransurban emunerationReport eport 75

LTI outcomes

 new proects including the ogan nhancement roect in risane the press anes in the Greater he plan performance awards vested on August ashington Area the est Gate unnel roect and performance period uly to une he Airportin outcome of the performance tests were as follows  unding—alanced mi of det and euity to support the

Test type Result of test % of units vest development pipeline while maintaining strong investment grade credit metrics including  illion in det funding raised or refinanced etending the average tenor of det y years and reducing the average cost of det y asis points  illion of euity raised through two entitlement offers with securities issued at an average discount of to the heoretical ights rice Overall vesting 81.6% hen preparing the targets for the plan the targets did not include an assumption associated with an euity Free Cash Flow measure raise to e undertaen to fund the est Gate unnel roect which occurred within the performance period for the plan he he target range for the measure in the plans taes into Group undertoo an euity raising of illion in ecemer account forecast financial performance over the three years to fund this opportunity he impact of this euity raising over which the award is measured his threeyear forecast did not change the outcome of the component of the reflects nearterm growth generated y the usiness together with planned activities that deliver value over the lan longer term he target free cash growth per security over the performance period of this plan uly to une was erformance awards to e granted in will have a target achieved at Having set the target at the eginning of the range for growth in per security of etween and plan period the oard reviewed this outcome to ensure it had per annum his is calculated using the distriution of incorporated sufficient stretch over the threeyear period and cents per security as the ase his target range is considered was not affected y oneoff enefits that were outside of to e appropriately challenging for management taing into management endeavour anagement achievements were account the udget and forecast estimates of the Group over evaluated for demonstrale outcomes in ey areas of the the plan period his considers factors including the operating usiness strategy including performance outcomes the impact from development activities the capital strategy and cost of funding and opportunities for  perational efficiency—improvement in underlying capital releases hould management achieve these outcomes proportional Group A year on year and deliver growth in free cash for security holders the oard considers the outcomes for management and security holders  ustomer eperience—improvements delivered from would e strongly aligned initiatives including

 improved fee arrangements for customers Value of performance awards to vest and lapse in FY20  investment in customer technology platforms he diagram elow shows and performance parameters for current onfoot lans nitial vesting  the launch of a new national retail rand calculations for the plan indicate that of awards on  an improved customer hardship program issue will vest for eligile participants he oard will conduct a detailed review of all contriuting factors when finalising this  ortfolio development—disciplined investment including outcome which will e included in next year’s Remuneration eport  completion of the itylin ulla widening proect on time and ahead of udget

Current on-foot LTI plans and associated performance parameters

as ns ar an For personal use only use personal For ompare to eet

as ns ar an ompare to eet

as ns ar an ompare to eet

as ns ar an ompare to eet perormane

R perormane an 86

u u u u u un un un TransurbanTransurban 13 76 RemunerationFY19 Corporate Reort Report

How variable remuneration is structured

Short Term Incentive (STI)—how does it work?

Description

Performance period

Opportunity For ‘attarget’ performance, the CEO has the opportunity to receive 100% of TEC

Payment and deferral

How is the annual pool determined

Performance are unique to the individual’s area of accountability. Individuals have a clear line of sight to KPIs measures term earnings. This measure provides a better reflection of the performance of the Group’s assets than statutory EBITDA. s management’s ability to influence the expenditure of the business. Strong cost : measures focus on improving the Group’s HSE culture and reducing workplace

0 0 Recorae nur reuenc Rate empoees 0 Recorae nur reuenc Rate contractors Roa nur rash ne

For personal use only use personal For 0 Roa afet ction ans

Definitions

Remuneration RemunerationReport Reort 77

The Board utilises the annual budget as the primary input to determine appropriate stretch financial targets. hen approving the

budget, the Board reviews the core principles and assumptions underpinning the budget. Specifically for proportional EBITDA, the budget incorporates base business growth derived from networkwide traffic performance, price growth and impacts of inflation and adusts for events such as construction and proect completion and the impact of acquisitions. Directly controllable initiatives including road safety, lane availability, operational efficiencies and the impact of development activity are also incorporated. Once the budget has been finalised, the Board determines the STI targets. In order to ensure that sufficient stretch is incorporated, consideration is given to the quantifiable risks and opportunities that can influence the Group’s financial performance. In some instances, the Board may deem it appropriate to exclude significant items and the budget for discretionary research and development initiatives. The targets use a constant currency for operations within the SA and Canada.

The Board reviews HSE targets each year with a view to continuously improving the HSE culture and performance of the Group.

Individual targets as set out in KPIs include consideration as to rolerelated accountabilities and responsibilities in the context of business strategic priorities. Executive KPIs consist of similar categories to those of the CEO as disclosed on page of this report and reflect the individual’s role and areas of responsibility.

The Board assesses performance against Group measures and the results of key elements are independently validated. The Board confirms final outcomes for individual and Group performance and has discretion to adust the performance conditions and outcomes.

If employment ceases before performance is assessed, generally there is no entitlement to receive any STI award. If employment ceases before the end of the twoyear restriction period, any unvested deferred securities will lapse, unless the plan rules provide otherwise or the Board otherwise resolves.

Fraudulent or dishonest behaviour will result in the forfeiture or clawback of any unvested awards. Further, at the discretion of the Board, awards are subect to forfeiture or clawback where there is a financial misstatement circumstance or the allocation of awards was made in error, on the basis of the misrepresentation or an omission, or on the basis of facts or circumstances that were later proven to be untrue or inaccurate applicable to both STI and TI plans

For personal use only use personal For Transurban 78 RemunerationFY19 Corporate Reort Report

articipation in the plan is offered to the and other ecutive and a ver liited nuber of other eploees noinated b the and approved b the oard

Grants are ade in the for of perforance aards at no cost to the recipient ach perforance aard is an entitleent to receive a ransurban stapled securit, or an equivalent cash paent, on ters and conditions deterined b the oard, subect to the achieveent of vesting conditions erforance aards do not carr dividend or voting entitleents prior to vesting

he three financial ears coencing on ul in the ear the grant is ade eg the grant has a perforance period coencing ul and ending une

The CEO’s opportunity is 147% of TEC and the opportunity for all other Executive KMP is 80% of TEC. The minimum vesting outcoe an individual can receive is of the aard if the perforance easures are not achieved and the aiu vesting outcoe an individual can receive is capped at of the aard if perforance easures are achieved

o perforance easures are used to deterine the nuber of aards that ill vest at the end of the perforance period relative otal hareholder eturn against a bespoke coparator group and ree ash lo each ith an equal eighting

elative is easured against a bespoke coparator group coprising copanies in the transport, utilities, real estate, construction and infrastructure Global ndustr lassification standards sectors of the he copanies in this group for grants ade during ere

Abacus Property Group, AGL Energy Limited, APA Group, Atlas Arteria Group, Aurizon Holdings Limited, Ausnet Services Limited, BWP Trust Ord Units, Charter Hall Group, Charter Hall Retail Reit Unit, Chorus Limited, Cromwell Property Group, Dexus Property Group, Goodman Group, GPT Group, Growthpoint Properties Australia, Investa Office Fund, Lendlease Group, Mirvac Group, Qantas Airways Limited, Qube Holdings Limited, Scentre Group, Shopping Centres Australasia Property Group, Spark Infrastructure Group, Spark New Zealand Limited NZX, Stockland Corporation Limited, Sydney Airport, Telstra Corporation Limited, TPG Telecom Limited, Transurban Group, Vicinity Centres.

he list belo shos the copanies that ere ecluded fro the coparator group in here ere no ne copanies to the group copared to the prior ear

opanies ecluded in ell outside of veo Group, onadelphous Group iited, iva nerg eit iited, ocus ounications iited ther nibail odaco estfield oard approved eclusion, estfield orporation delisted

per securit targets are set b the oard utilising the annual budget and threeear forecast as the priar inputs consistent ith the approach taken for easures of proportional and proportional net costs nce the budget and forecast has been finalised, the oard deterines the targets b analsing the cash flo outcoes, ensuring sufficient stretch is incorporated he actual outcoes are revieed in detail against targets to consider ke reasons for variance and assess hether an adjustments should be made in determining management’s performance. he oard a ake adustents here a decision has been ade, in the interests of the ransurban Group and its securit holders that differs fro the original budgeted assuptions his a include factors such as significant equit raisings to fund groth opportunities or changes to the tiing or quantu of anticipated capital releases actors that a cause groth to fluctuate ear on ear include activities that are intended to generate longter value for the business but a negativel ipact groth in the near ter he Group is currentl in a significant developent phase ith seven aor proects across all arkets to be delivered over the net five ears he calculation is included in note of the audited financial stateents

is a relative, eternal, arketbased perforance easure against those copanies ith hich the Group copetes for capital t provides a direct link beteen eecutive reard and securit holder return easures total return on investent of a securit, taking into account both capital appreciation and distributed andor dividend incoe that as reinvested on a preta basis Growth in FCF per security reflects the Group’s continued focus on maximising available free cash. The Group seeks to consistentl gro its distributions ear on ear and to align securit holder distributions ith per securit

ace value allocation ethodolog discounted for distributions andor dividends foregone throughout the perforance period or each grant ccle, the allocation calculations are perfored on ul of the first perforance ear using a valuation deterined b an independent third part

For personal use only use personal For Remuneration RemunerationReport Reort 79

The Group uses an independent report that sets out the Groups T growth and that of each company in the bespoke comparator group. P of securities for the 0 trading days up to and including the testing date is used to calculate T. The level of TSR growth achieved by the Group is given a percentile ranking in relation to the Group’s performance compared to the performance of other companies in the comparator group the highestranking company is ranked at the 100th percentile. The T performance is tested at the end of the threeyear performance period and this ranking determines the extent to which performance awards subject to this component vest. FY19 TSR vesting schedule The T component of performance awards granted during F1 will vest on a straight line basis in accordance with the following table

The Group’s relative TSR ranking in the comparator group % of performance awards that vest

ero

traight line vesting between 0 and 100

100

The Groups FCF per security percentage growth rate is calculated over the threeyear performance period. The oard uses its discretion to determine whether the performance awards are settled in Transurban stapled securities or a cash payment of euivalent value. Following testing any awards that do not vest lapse and any awards that vest are automatically exercised into Transurban stapled securities or settled in cash at the discretion of the oard. o price is payable on exercise. FY19 FCF vesting schedule The FCF per security component of performance awards granted during FY19 will vest based on the Group’s cumulative average annual growth targets translated into annual FCF per security over the threeyear performance period as set out below

% annual growth in FCF per security (distribution base of % of performance awards that vest 56.0 cents per security)

ess than .% ero

etween .% and 7.% traight line vesting between 0 and 100

7.% or more 100

Cessation of employment f employment ceases before the performance measures are tested generally there is no entitlement to unvested performance awards and any unvested awards will lapse unless the plan rules provide otherwise or the oard otherwise resolves.

Clawback Treatment as per T

Minimum security Service holding agreements

e oar as enorse minimum seurity oin uieines e remuneration an oter terms o emoyment or te or onexeutie iretors te an xeutie e an oter xeutie are ormaise in serie areements uieines reommen tat a ui an maintain a tat ae no seiie term ner tese areements te minimum seurity oin o ransuran stae seurities an oter xeutie are eiie to artiiate in an eua in aue to teir ixe annua remuneration exuin ans ome oter ey asets o te areements in ae or

suerannuation e minimum stae seurity oin an e are outine eo For personal use only use personal For aumuate oer a ieyear erio ae eiter aiee an maintaine teir minimum seurity oin or or Period of notice Period of notice tose ne to te rou are on tra to meet te ieyear to terminate by to terminate by 1 aumuation erio the Executive KMP the Group months 1 months

months months

ayment in ieu o te notie erio may e roie ase on te exeuties ixe remuneration e rou may aso terminate at any time itout notie or serious misonut TransuranTransurban 80 RemunerationFY19 Corporate Reort Report

Non-executive Director remuneration

Remuneration polic Remuneration arrangements

The diagram below sets out the key objectives of the Group’s aimum aggregate remuneration onexeutie iretor remuneration oiy an o tey are achieved through the Group’s remuneration framework: e areate remuneration tat may e ai to onexeutie iretors in any year is ae at a ee aroe y seurity oers eurity oers at te nnua enera eetin aroe te urrent areate ee oo o er year inusie o suerannuation ontriutions qualified Directors iretor ee ee are et it rear to oneecutive irector fees the responsibilities and risks attached to the role, e Remuneration eoe an uture ommittee reuary the time commitment and workload expected, reies onexeutie iretor ees an su reies inue the Director’s experience and expertise, and erioi enmarin aainst oter uiy iste entities o market benchmark data simiar sie an omexity to ransuran

reie o onexeutie iretor ees ase iretor an ommittee ees as unertaen urin e Remuneration eoe an uture ommittee reommene iretor remuneration onit o ae iretor an te oar suseuenty resoe tat onexeutie ee an ommittee ee o eement o iretor iretor ees remain unane or te aenar year remuneration is 'at risk' (i.e. fees are not based on te perormane o te roup or iniiua urrent iretor an ommittee ees er annum are set out iretor eo

Board fees Chair ember

Committee fees uit an Risk ommittee iretor are enourae to o ranuran euritie an te oar a enore minimum Chair eurit oin uieine or iretor ember

Remuneration eople an ulture ommittee

Chair ember

ere are no ees or memersi o te omination ommittee

e air o te oar oes not reeie any aitiona ees or ommittee resonsiiities

e air o ea ommittee ony reeies te air ee an not a memer ee

onexeutie iretors are ermitte to e ai aitiona ees or seia uties or exertions o su ees ere ai urin onexeutie iretors are aso entite to e reimurse or a usinessreate exenses inuin trae as may e inurre in te isare o teir uties

For personal use only use personal For onexeutie iretors are not entite to any retirement eneits RemunerationTransuran emunerationReport eport 81

oneecutive irector relate part inormation

ll oneecutive irector related party relationships are based on normal commercial terms one of the oneecutive irectors were or are involved in any procurement or other oard decisionmaking regarding the companies or firms with which they have an association

The Group is not reuired to make the following disclosures but for transparency reasons notes the following relationships and transactions

irector Relate part Services provie

asted r indsay asted is Chair and a noneecutive director estpac provides transactional banking and banking products and services to of estpac anking Corporation Transurban on normal commercial terms uring FY19 estpac participated in three new debt financings and was a Co gent on an placement conducted by Transurban n addition to providing corporate working capital and letter of credit facilities to Transurban estpac participates in numerous debt facilities and acts as the facility agent for certain debt facilities all on normal commercial terms

Chatfield r eil Chatfield was Chair and a noneecutive director Seek provides employment advertising services to Transurban on normal of Seek imited until 1 ecember 1 commercial terms

S ostyn s Samantha ostyn is Chair and a noneecutive uring FY19 Citigroup was a oint ead anager on a Corporate T director of Citigroup ty imited issuance and was Cogent on a Cardinal placement all conducted by s Samantha ostyn was a noneecutive director of Transurban Citigroup provides corporate working capital facilities to irgin ustralia oldings imited until 9 ay 19 Transurban as well as participating in the debt facility provided to all on normal commercial terms irgin provides air travel services to Transurban on normal commercial terms

C O’Reilly Ms Christine O’Reilly was a noneecutive director of Energy Australia is one of Transurban’s electricity providers in NSW and nergy ustralia imited until ugust 1 ueensland This relationship is based on normal commercial terms

R Slater r Rodney Slater retired from the oard on 11 ctober Transurban used S for various lobbying activities and incurred S1 1 for services during FY19 r Slater is a partner in the public policy practice group of ashington C firm Suire atton oggs S

For personal use only use personal For TransuranTransurban 82 emunerationFY19 Corporate eport Report

Statutory tables

ealing in securities The relevant values of the grants are as follows: alue o Securit In accordance with the Group’s Dealing in Securities Policy, aars at price employees who have euity awards under a Group euity plan allocation alue o aars at grant may not hedge against those euity awards n addition Recipient Grant ate ate at grant ate ate ecutive may not hedge against entitlements that have Relative per vested but remain subject to a holding lock irectors and ace value TSR securit employees are also prohibited from entering into margin lending arrangements using Transurban stapled securities as Eecutive August security M CEO October umer o ST eerre securities grante in ecurity price as at uly allocation date discounted for distributions and dividends forgone throughout the threeyear performance period air value in accordance with – sharebased payments treatment of market alance Grante ature oreite alance conditions ecutive at start uring ear as an pai uring at the en

o ear remuneration uring ear the ear o ear The table below shows the number of T awards granted to S Charlton – ecutive during

T Adas – otential value aimum ace umer o o grant et to value o Auent – ecutive perormance vest at Target potential value o W allantine – aars grante grant to vest

S Charlton A ead – NA T Adas M uey – Auent S ohnson – W allantine Tobin – A ead

A Watson – M uey

ndrew ead ceased being a on eptember S ohnson ecurities vested during at the end of the twoyear restriction period Tobin

A Watson erormance aars grante in ndrew ead ceased being a on eptember ligible ecutive ecluding the received performance awards with a grant date of ugust umer o perormance aars hich ollowing the receipt of security holder approval at the G the received performance awards with a grant date veste an lapse uring of ctober ll performance awards granted in may vest subject to a performance period from uly umer o alue o umer o through to une ecutive ars veste ars veste ars lapse

The target value of the grant has been estimated based S Charlton on the award valuations at grant date which is a fair value T Adas

approach for the T component and a face value approach Auent discounted for distributionsand or dividends for the component The fair value for T considers the probability that W allantine

the ecutive may not derive value from the T award A ead For personal use only use personal For along with other factors including difficulty of achieving M uey performance hurdles and anticipated security price volatility S ohnson

The maimum T opportunity for each ecutive is the Tobin face value of the award ie the value the ecutive would receive if all their performance awards vested based on A Watson Transurban’s security price at the time the award was granted). ennifer ument awards were settled in cash The minimum total value of the grant if the applicable ndrew ead ceased being a on eptember performance measures are not met is ero ased on the fair value at date of grant or each ecutive of their T vested and lapsed RemunerationTransuran emunerationReport eport 83

umer o perormance aars on issue as at une

Grante ature an apse or alance at alance at uring ear as pai uring oreite the en o start o ear remuneration ear uring ear ear

. ndrew ead ceased being a P on September . . o closely related parties o ecutie P held any perormance awards during .

Securities hel ecutive as at une

alance at hanges alance at start o ear uring ear en o ear

– – –

. ndrew ead ceased being a P on September . . o Transurban securities were held nominally or held by closely related parties o ecutie P during .

For personal use only use personal For TransuranTransurban 84 emunerationFY19 Corporate eport Report

ecutive remuneration

Post- employment Long-term Short-term employee benefits Deferred STI6 benefits benefits Share-based benefits7 Total

ash salar an ash ST onmonetar Super ong service uit aars ash ees eneits annuation leave aars

CEO

S harlton – –

ther ecutie P

T ams – –

ument – –

allantine – –

ea – –

ue – –

S ohnson – –

Toin – –

atson – –

Total

. ennier ument is remunerated in S Dollars. The amounts shown in the table aboe hae been conerted to ustralian Dollars using the aerage echange rate oer the reporting period, being .. . 19: Wes Ballantine’s cash salary includes a cash allowance of $113,205 relating to his interstate relocation and a ehicle lease reund o ,. 18: Wes Ballantine’s cash salary includes a cash allowance of $127,452 relating to his interstate relocation and Sue Johnson’s cash salary includes $125,492 for her interstate relocation. . ndrew ead ceased being a P on September amounts reported aboe hae been prorated or the period o time as P. ichele uey returned to her P role rom parental leae on September amounts reported aboe or both and hae been prorated or the period o time as P. . The amount represents the cash STI payment to the ecutie P or , which will be paid in September . . onmonetary beneits include Group employee insurance and relocation allowances where applicable in ). . component o STI award is deerred into securities. In accordance with accounting standards, the deerred component will be recognised oer the threeyear serice period. The amount For personal use only use personal For recognised in this table is the accounting charge or unested grants. . In accordance with the reuirements o the accounting standards, remuneration includes a proportion o the air alue o euity compensation granted or outstanding during the year i.e. perormance awards under the TI plan). The air alue o euity instruments is determined as at the grant date and is progressiely allocated oer the perormance period. The amount included, as remuneration may be dierent to the beneit i any) that the ecutie P may ultimately realise should the euity instruments est. The air alue o perormance awards at the date o their grant has been independently determined in accordance with accounting standards. The air alue o the perormance awards has been alued applying a onte arlo simulation using a lacScholes framework) to model Transurban’s security price and where applicable, the TSR performance against the comparator group perormance.

RemunerationTransuran 2019 RemunerationReport Report 85

Remuneration pai to oneecutive irectors

Current Short-term Post-employment Non-executive benefits benefits

Directors ees Superannuation Total

aste

irrell

hatiel

R gar

S ostn

Reill

Scott

R Slater – –

ilson

Total

1. Rodney Slater was remunerated in S ollars. The amounts shown in the table aboe hae been conerted to ustralian ollars using the aerage echange rate oer the reporting period up until his retirement on 11 ctober 2018 of $0.7292. 2. Superannuation contributions made on behalf of onexecutive Directors to satisfy the Group’s obligations under applicable superannuation guarantee legislation.

Securities hel oneecutive irectors as at une an at the ate o this Report

alance at hanges alance at start o ear uring ear en o ear

C O’Reilly

For personal use only use personal For

1. Rodney Slater retired as a irector on 11 ctober 2018. 2. o Transurban securities were held nominally or held by closely related parties of oneecutie irectors during 19. 3. Balance at date of this Report is same as balance at end of 19. Transurban 86 FY19 Corporate Report

Auditor’s Independence Declaration

As lead auditor for the audit of Transurban Holdings Limited, Transurban Holding Trust and Transurban International Limited for the year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

(b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Transurban Holdings Limited, Transurban Holding Trust and Transurban International Limited and the entities they controlled during the period.

Marcus Laithwaite Melbourne Partner 7 August 2019

PricewaterhouseCoopers For personal use only use personal For

PricewaterhouseCoopers, ABN 52 780 433 757 2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation. Financial

Statements87 For personal use only use personal For Transurban Section A: 88 SectionFY19 A: Corporate Report GroupTransurban financial Holdings statements Limited 2 Group financial statements ABN 86 098 143 429

Contents

89 Section A: Group financial statements Consolidated statement of comprehensive income Consolidated balance sheet Consolidated statement of changes in equity Consolidated statement of cash flows

95 Section B: Notes to the Group financial statements Basis of preparation and significant B1 B2 B3 changes Corporate Summary of Basis of information significant changes preparation in the current reporting period

Operating B4 B5 B6 B7 B8 performance Segment Revenue Significant Income Working information items tax capital

Security holder outcomes B9 B10 Earnings per Dividends/distributions stapled security and free cash

Capital and B11 B12 B13 B14 B15 borrowings Contributed Reserves Net finance Borrowings Derivatives and equity costs financial risk management

Concession B16 B17 B18 B19 B20 B21 summary Goodwill Other intangible Concession Maintenance Construction Other assets financial asset provision obligation liabilities— provision concession liabilities Group B22 B23 B24 B25 B26 B27 structure Principles of Material Business Equity Non-controlling Deed of cross consolidation subsidiaries combinations accounted interests—other and investments intra-group guarantees Items not B28 B29 B30 recognised Contingencies Commitments Subsequent events

Other B31 B32 B33 B34 B35 Related party Key management Remuneration Parent entity Changes in transactions personnel of auditors disclosures accounting compensation policies

153 Section C: Transurban Holding Trust (‘THT’) and Transurban International Limited (‘TIL’) financial statements Consolidated statements of comprehensive income Consolidated balance sheets Consolidated statements of changes in equity Consolidated statements of cash flows

159 Section D: Notes to the THT and TIL financial statements

176 Section E: Signed reports Directors’ declaration Independent auditor’s report to the stapled security holders

186 Security holder information

For personal use only use personal For

Section A: Financial TransurbanGroup financial Holdings Limitedstatements StatementsSection A: 89 ABN 86 098 143 429 Group financial statements 3

Transurban Holdings Limited Section A: ABN 86 098 143 429 Group financial statements 3

Section : Sectionrou financial : statements rou financial statements Consolidated statement of comprehensive income for the year ended 30 June 2019

ote Consolidatedeenue statement of comprehensive income for the year ended 30 June 201 9 Expenses () () ote () () eenue () () Expenses () () ploee eneits epense () () oad operatin costs Total eenses () () onstruction costs

ransaction and interation costs arnings before dereciation amortisation net finance costs orporate and other epenses euit accounted inestments and income taes Total eenses () ()

() () arnings before dereciation amortisation net finance costs () () euit accounted inestments and income taes Total dereciation and amortisation () ()

ortisation () () Depreciation () () Total dereciation and amortisation () () –

rofit before income ta et inance costs

hare o net proitloss o euit accounted inestents ain on realuation o euit accounted inestent – rofit for te ear rofit before income ta

Profit/(loss) attributable to: Incoe ta eneit rofit for te ear ̶̶ ̶ (‘’) () ()

̶ ̶ Profit/(loss) attributable to: Profit attributable to ordinary security holders of the stapled group 485 rdinar securit holders o the stapled roup — () () ̶̶ ̶ ttriutale to ransuran oldins iited (‘’) rofit for te ear ̶ ̶ ttriutale to I

Profit attributable to ordinary security holders of the stapled group 485 ter comreensie income oncontrollin interests—other Items that may be reclassified to profit or loss in the future rofit for te ear () ()

() () ter comreensie income Items that may be reclassified to profit or loss in the future () () hanes in the air alue o cash lo hedes net o ta Other comprehensive income/(loss) for the year, net of tax () (143) hare o other coprehensie incoeloss o euit accounted inestents net o ta Total comreensie income(loss) for te ear () oeent in shareased paents resere Total comprehensive income/(loss) for the year is attributable to: chane dierences on translation o orth erican operations net o ta Other comprehensive income/(loss) for the year, net of tax (143) ̶ () () Total comreensie income(loss) for te ear () For personal use only use personal For ̶ Total comprehensive income/(loss) for the year is attributable to: — () () rdinar securit holders o the stapled roup Total comreensie income(loss) for te ear () ̶ ttriutale to Cents Cents ̶ ttriutale to I arnings er securit attributable to ordinar securit olders of te staled grou: oncontrollin interests—other Total comreensie income(loss) for te ear () Cents Cents arnings er securit attributable to ordinar securit olders of te staled grou:

he aoe consolidated stateent o coprehensie incoe should e read in conunction ith the accopanin notes Transurban Section A: 90 SectionFY19 A: Corporate Report GroupTransurban financial Holdings statements Limited 4 Group financial statements ABN 86 098 143 429

Section A: Transurban Holdings Limited 4 Group financial statements ABN 86 098 143 429

Consolidated balance sheet as at 30 June 2019 ote ssets ConsolidatedCurrent assets balance sheet as at 30 June 2019 ote ssets Current assets – Total current assets

Non-current assets – Total current assets –

– Non-current assets – – Total non-current assets

Total assets

Total non-current assets Liabilities

Current liabilities Total assets

Liabilities Current liabilities – Total current liabilities

– Non-current liabilities Total current liabilities

Non-current liabilities – Total non-current liabilities

– Total liabilities

Total non-current liabilities et assets

Total liabilities uit

et assets

uit

only use personal For Equity attributable to security holders of the stapled group () () — () () Total euit () Equity The attributable30 June 2018 to balance security sheet holders has ofbeen the restated stapled togroup reflect the final fair value of the purchase price allocation balances of A25, which was acquired on 5 June 2018. Refer to note B24. — Total euit The 30 June 2018 balance sheet has been restated to reflect the final fair value of the purchase price allocation balances of A25, which was acquired on 5 June 2018. Refer to note B24.

Section A: Financial rnsurnGroup financial odins imitedstatements Statementsetion 91 Group finni sttements 5

Transurban Holdings Limited Section A: ABN 86 098 143 429 Group financial statements 5

Consolidated statement of changes in equity for the year ended 30 June 2019

Consolidated statement of changes in equity for the year ended 3 0 June 2019 ttributable to securit olders of te staled grou — — uit attributable to on oter controlling umber2,225 of Contributed1,746 (101) ccumulated(3,455) members7,401— 5,591 interests1,175— 6,766Total securities– euit– eseres– losses THT TIL– Total oter euit Balance at 1 July 2018 alance at une as originall Comprehensive income resented 2,225 1,746 (101) (3,455) 7,401 5,591 1,175 6,766 – – – – – – – – – – Balance at 1 July 2018 () () Total comprehensive income/(loss) – – Comprehensive income Transactions with owners in their – – – capacity as owners: – – – Total comprehensive income/(loss) – – (–) (–) () (–) () Transactions with owners in their – – – capacity as owners: – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – — – – – – – – – – – – – Refer —to note B 35 for further details on the change in– accounting policy.– – – – On 21 September 2018, the Group successfully completed the fully underwritten institutional and retail components of its pro-rata accelerated renounceable 10 for alance57 entitlement at une offer. The institutional component raised gross proceeds of $2,996 ( million) at an issue ( price) of $10.80 per security . The retail component raised gross proceeds of $1,222 million at an issue price of $10.80 per security. A further $600 million was raised on 12 September 2018 through a placement to AustralianSuper Referand Tawreed to note BInvestments35 for further Limited details (Tawreed) on the change at an issue in accounting price of $10.85 policy. per security. The total gross proceeds of $4,818 million ($4,748 million net of transaction costs, includingOn 21 September $5 million 2018, of non the-cash Group tax benefitsuccessfully) were completed used to fund the thefully Group’s underwritten investment institutional in WestConnex and retail (WCX) components through of Sydney its pro Transport-rata accelerated Partners renounceable Joint venture 10 (STP for JV) 57and entitlement for general offer. corporate The institution purposes.al component raised gross proceeds of $2,996 million at an issue price of $10.80 per security. The retail component raised gross proceedsFrom 2012 of it $1,222 is the Group's million at policy an issue that pricea portion of $10.80 of all Shortper security. Term Incentives A further issued$600 million to the wasCEO raised and other on 12 senior September executives 2018 are thr deferredough a placement for a period to ofAustralianSuper 2 years. In additionand Tawreed to the Investments Short Term Limited Incentives, (Tawreed) Stapled at Securities an issue price(including of $10.85 units perin the security. Trust) wereThe total issued gross to executivesproceeds of under $4,818 the million Group's ($4, Long748 millionTerm Incentive net of transaction share-based costs , includingpayment plans.$5 million These of nonsecu-cashrities taxare benefit held by) werethe executive used to fundbut will the only Group’s vest ininvestment accordance in WestConnexwith the terms (WCX) of the through plans. Sydney Transport Partners Joint venture (STP JV) Referand for to general note B10 corporate for further purposes. details of dividends and distributions provided for or paid. UnderFrom 2012 the Distribution it is the Group's Reinvestment policy that Plan a portion (DRP) ,of holders all Short of Termstapled Incentives securities issued may elect to the to CEO have and all or other part senior of their executives distribution are entitlements deferred for satisfied a period by of the 2 years. issue In of new stapledaddition securities to the Short rather Term than Incentives, by cash. StapledThe DRP Securities was not in(including effect for units the finalin the di stributionTrust) were for issued FY2018, to executivespaid in August under 2018. the TheGroup's DRP Longapplie Termd for Incentivethe interim share FY2019-based paymentdistribution. plans. These securities are held by the executive but will only vest in accordance with the terms of the plans. DistributionsRefer to note andB10 dividends for further were details paid of duringdividends the andperiod distributions to the non provided-controlling for interestor paid. partners in Eastern Distributor, Transurban Queensland and Interlink Roads (Under‘M5 Motorway the Distribution’). Reinvestment Plan (DRP), holders of stapled securities may elect to have all or part of their distribution entitlements satisfied by the issue of new stapledRefer to securitiesnote B24 ratherfor further than details by cash. in Therelation DRP to was recognition not in effect of non for -thecontrolling final distribution interest upon for FY2018, the step paid-up in acquisition August 2018. of Interlink The DRP M5 applie ($277d million)for the intanderim other FY2019 transactionsdistribution. with non-controlling interests including $86 million to acquire an additional interest in Interlink M5 and a related $7 million in payment for stamp duty on thisDistributions transaction and. dividends were paid during the period to the non-controlling interest partners in Eastern Distributor, Transurban Queensland and Interlink Roads (‘M5 Motorway’). Refer to note B24 for further details in relation to recognition of non-controlling interest upon the step-up acquisition of Interlink M5 ($277 million) and other transactions with non-controlling interests including $86 million to acquire an additional interest in Interlink M5 and a related $7 million in payment for stamp duty on this transaction.

For personal use only use personal For

Transurban Section A: 92 ectionFY19 Corporate Report GroupTransuran financial olings statements Limite Group inancial statements 0 1 2

etion rnsurn odins imited 6 Group finni sttements

Consolidated statement of changes in equity for the year ended 30 June 2018

— — — — – – – – – – – – Comprehensive income – – – – – – Total comprehensive income/(loss) – – (47)– (153)– 571 371 (46)– 325 Transactions with owners in their capacity as owners: – – – – – – – – – – – – – – – – – – – – – – – – – – — – – – – – – – – – – – – – – n — nur the Group suessfu ompeted– its prort– eerted renounee– for – entitement offer– he institution– omponent rised ross proeeds of miion t n issue prie of173 per seurit296 he reti omponent– rised ross(107) proeeds of 541 miion t n730 issue prie of (88) per seurit642 he tot ross proeeds from the entitement offer were miion miion net of trnstion osts) nd wi e used to fund the onstrution of the West Gte unne roet nd for ener orporte purposes Fromn 2012 nur it is the Group’s the Group policy suessfu tht portion ompeted of hort its pro ermrt nentives eerted issued renounee to the C nd for other entitement senior exeutives offer he re institution deferred for omponent period of rised er rosss n dditionproeeds to of the hort miion erm tnentives n issue tpedprie of eurities per inudin seurit unitshe reti in the omponent rust) were rised issued ross to exeutives proeeds under of the mii Group’son t nLong issue Term prie Incentive of share persed seurit hepment tot rosspns proeeds hese seurities from the re entitement hed the offer exeutive were ut wi miion on vest in ordne miion net with of trnstion the terms of osts) the pns nd wi e used to fund the onstrution of the West Gteefer unneto note roet for nd further for ener detis oforporte dividends purposes nd distriutions provided for or pid nderFrom 2012 the it is the for Group’sdistriutions policy pid tht durin portion the ofperiod hort hoders erm of nentives stped seurities issued to m the Ceet ndto hve other senior or prt exeutives of their distriution re deferred entitements for period stisfied of er sthe n issue dditionof new stped to the hortseurities erm rther nentives thn tped sh hiseurities ontinued inudin to pp units for in the the interim rust) were issued distriution to exeutives nd ws under suspended the Group’s for the Long distriution Term Incentive for the share six monthssed endedpment pns une hese pid seurities in uust re hed the exeutive ut wi on vest in ordne with the terms of the pns istriutionsefer to note were for pid further durin detis the period of dividends to the non nd ontroindistriutions interest provided prtners for or inpid stern istriutor nd rnsurn ueensnd nder the for distriutions pid durin the period hoders of stped seurities m eet to hve or prt of their distriution entitements stisfied the issue

of new stped seurities rther thn sh his ontinued to pp for the interim distriution nd ws suspended for the distriution for the six months ended une pid in uust istriutions were pid durin the period to the nonontroin interest prtners in stern istriutor nd rnsurn ueensnd

For personal use only use personal For

Section A: Financial TransuranGroup financial olings Limitestatements Statementsection 93 0 1 2 Group inancial statements

Transuran olings Limite ection 0 1 2 Group inancial statements

– – – – – – – – – –

– – For personal use only use personal For

ection Transuran olings Limite Transurban Group inancial statements Section 0 1 2 A: 94 FY19 Corporate Report Group financial statements

ection Transuran olings Limite Group inancial statements 0 1 2

– – – – – – – – – – – – – – – – – – – – Total erivatives alance at 0 une 201 is a liaility o 200 million The ierence in– carrying value to the tale aove relates to interest rate– sap contracts orar echange contracts the interest portion o crosscurrency interest rate sap contracts– an creit valuation an eit valuation austments– hich are eclue rom the alances aove

Total erivatives alance at 0 une 201 is a liaility o 200 million The ierence in carrying value to the tale aove relates to interest rate sap contracts orar echange contracts the interest portion o crosscurrency interest rate sap contracts an creit valuation an eit valuation austments hich are eclue rom the alances aove – – – – – – – – – – – – – – – – – – Total erivatives alance at 0 une 201 is a liaility o 21 million The ierence in– carrying value to the tale aove relates to interest rate– sap contracts orar echange contracts the interest portion o crosscurrency interest rate sap contracts– an creit valuation an eit valuation austments– hich are eclue rom the alances aove

Total erivatives alance at 0 une 201 is a liaility o 21 million The ierence in carrying value to the tale aove relates to interest rate sap contracts orar echange contracts the interest portion o crosscurrency interest rate sap contracts an creit valuation an eit valuation austments hich are eclue rom

the alances aove For personal use only use personal For

Section B: Notes to the consolidated Financial Transuranfinancial statementsolings Limite for the year ended 30 June 2019 ection otes to the consoliate inancialStatements statements 95 0 1 2 or the year ene 0 une 201

Transurban Holdings Limited (‘the Company’, ‘the Parent’ or ‘THL’) is a Company incorporated in Australia and limited by shares that are pulicly trae on the ustralian ecurities change These inancial statements have een prepare as a consoliation o the inancial statements o Transurban Holdings Limited and its controlled entities (‘Transurban’, ‘Transurban Holdings Limited Group’, ‘Transurban Group’ or ‘the Group’). The controlle entities o TL inclue the other memers o the staple group eing Transuran International Limite an its controlled entities (‘TIL’) an Transurban Infrastructure Management Limited (‘TIML’) as the responsile entity o Transuran Holding Trust and its controlled entities (‘THT’). The euity securities o TL TT an TIL are staple an cannot e trae separately ntities ithin the Group are omicile an incorporate in ustralia the nite tates o merica an anaa

The consoliate inancial statements o the Transuran Group or the year ene 0 une 201 ere authorise or issue in accorance ith a resolution o the irectors on ugust 201 irectors have the poer to amen an reissue the inancial report

The inancial position an perormance o the Group as particularly aecte y the olloing transactions uring the reporting perio

n 1 eptemer 201 Transuran acuire an aitional 2 euity interest in the otoray or a cash consieration o 11 million This transaction took the Group’s total equity interest to 58.24%, resulting in the otoray eing consoliate into the Group n ecemer 201 the Group acuire an aitional 1 interest in the otoray an its corresponing shareholer loan notes or a total consieration o million This transaction too the Group’s total equity interest in otoray to eer to note 2 or urther inormation

n 21 eptemer 201 the Group successully complete the ully unerritten institutional an retail components o its prorata accelerate renounceale 10 or entitlement oer The institutional component raise gross procees o 2 million at an issue price o 100 per security The retail component raise gross procees o 1222 million at an issue price o 100 per security urther 00 million as raise on 12 eptemer 201 through a placement to ustralianuper an Taree at an issue price o 10 per security The total gross procees o 1 million million net o transaction costs incluing million o noncash ta eneit) were used to fund the Group’s investment in through the T an or general corporate purposes

Sydney Transport Partners joint venture (‘ ’) n 2 eptemer 201 the T acuire a controlling 1 stae in roect ol Trust an sset ol Trust an their controlle entities collectively reerre to as estonne or rom the Government cuisition For the purposes o the cuisition a consortium T as estalishe comprising Transuran 0 ustralianuper 20 anaa ension lan Investment oar ‘I’ (20.5%) and Tawreed (9%). The Group’s effective equity interest in WC through its euity investment in T is 2 eer to note 2 or urther inormation

n 21 arch 201 the est Gate Tunnel Truc ans an Traic anagement ill 201 as passe y oth houses o ictorian arliament proviing or a concession en ate o 1 anuary 20 or the est Gate Tunnel currently uner construction itionally on 21 arch 201 the ityLin oncession ee menments or the est Gate Tunnel roect receive the necessary parliamentary consents to provie or an etension o the concession en ate or ityLin to 1 anuary 20 The eective ate or the legislation an parliamentary consents is 11 pril 201 eer to notes 1 an 20 or urther inormation

For personal use only use personal For In pril 201 commercial close as reache on the Freericsurg tension proect The Freericsurg tension consists o the evelopment esign inancing construction maintenance an operation o a 10mile etension o the press Lanes in orth merica useuent to 0 une 201 the Group receive million or nonrecourse rivate ctivity ons issue in connection ith the proect eer to notes 21 an 0 or urther inormation

Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 96 ection otes to the consolidated financial statements Transurban Holdings Limited for the year ended 0 une 209 A 8 098 4 429

The Group financial statements are general purpose financial statements which

 Have been prepared in accordance with the Corporations Act 200, Australian accounting standards, and other authoritative pronouncements of the Australian Accounting tandards oard  Have adopted all accounting policies in accordance with Australian accounting standards, and where a standard permits a choice in accounting policy, the policy adopted by the Group has been disclosed in these financial statements  Have applied the option under AIC Corporations (tapled Group eports) Instrument 20588 to present the consolidated financial statements in one section (ection A), and all other reporting group members in a separate section (ection C)  o not early adopt any accounting standards or interpretations that have been issued or amended but are not yet effective  Comply with International financial reporting standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’);  Have been prepared under the historical cost convention, as modified by the revaluation of other financial assets and liabilities (including derivative financial instruments)  Are presented in Australian dollars, which is the Group’s functional and presentation currency  Have been rounded to the nearest million dollars, unless otherwise stated, in accordance with AIC Corporations (ounding in Financial/Director’s Reports) Instrument 2016/19 and  The presentation of comparative amounts has been restated, where applicable, to conform to the current period presentation.

oin onern THL’s current liabilities exceed its current assets by ,8 million as at 0 une 209. This is primarily driven by borrowing facilities with maturities less than 12 months, the Group’s distribution provision and the recognition of a construction obligation provision for the West Gate Tunnel Proect. The financial report has been prepared on a going concern basis, which assumes the continuity of normal operations. This is based on the following

 The Group has generated positive cash inflows from operating activities of ,9 million (208 ,05 million).  The Group has generated positive free cash of ,52 million (208 ,25 million)  The Group epects to refinance or repay with available cash all borrowing facilities classified as a current liability at 0 une 209  The Group has paid ,5 million of dividends and distributions to the Group’s security holders over the past 2 months. Payment of future dividends is at the discretion of the oard  The Group has available a total of ,50 million of undrawn general purpose borrowing facilities across a number of financial providers with a maturity beyond 2 months (total undrawn general purpose borrowing facilities is , million). Additionally, the Group has a further 4 million of undrawn borrowings facilities to provide funding for the Groups capital proects with a maturity beyond 2 months (total undrawn capital borrowings is 29 million)  ubsequent to 0 une 209 the Group has received cash proceeds of 944 million from the issuance of debt instruments with maturities beyond 2 months including 50 million in uro Medium Term otes (MT) for Corporate and 4 million in Private Activity onds to fund the construction of the redericksburg tension proect and  ubsequent to 0 une 209 the Group has refinanced the Transurban ueensland capital ependiture facility for 500 million. The facility has a maturity beyond 2 months.

orein urreny transation

oreign currency transactions are translated into the functional currency using the echange rates prevailing at the dates of the transactions. oreign echange gains and losses resulting from the settlement of such transactions, and from the translation at year end echange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in profit or loss, ecept when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

onmonetary items that are measured at fair value in a foreign currency are translated using the echange rates at the date when the fair value For personal use only use personal For was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. or eample, translation differences on nonmonetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on nonmonetary assets such as equities classified as availableforsale financial assets are recognised in the fair value reserve in equity.

Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban Holdings Limited Section B otes to the consolidated financial statements 97 AB 6 09 1 29 for the year ended 0 une 2019

orein urreny transation (ontinued)

The results and financial position of all of the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows

 assets and liabilities are translated at the closing rate at the reporting date;  income and expenses are translated at average exchange rates throughout the course of the year (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and  all resulting exchange differences are recognised in other comprehensive income n consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are taen to other comprehensive income

e and aended standards and interpretations The Group has adopted the following new or revised accounting standards and interpretations which became effective for the annual reporting period commencing 1 uly 201 The Group’s assessment of the impact of these new standards and interpretations is set out below.

Revenue Revenue from Contracts with Customers Changes in accounting policy Financial instruments Classification and measurement of share-based payment transactions ‘net settlement’ feature which requires employers to withhold amounts to settle the employee’s tax obligations.

Transfer of investment property, annual improvements 2014-2016 cycle and other amendments

Foreign currency transactions and advance currency

ountin standards and interpretations issued ut not yet eetive Certain new accounting standards and interpretations have been published but are not mandatory for the year ended 0 une 2019 The Groups assessment of the impact of these new standards and interpretations is set out below

Leases

For personal use only use personal For The standard will primarily affect the accounting for the Group’s operating leases. As at the Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 98 ection otes to the consolidated financial statements ransurban oldins imited for the ear ended une

asis of preparation continued

ountin standards and interpretations issued ut not yet eetive (ontinued)

The Group expects that net profit after tax will decrease by approximately Leases (continued) million for the year ending une as a result of adopting the new standard. roportional TA used to measure segment results is expected to increase by approximately million as the operating lease payments were preiously included in TA but the amortisation of the rightofuse assets and interest on the lease liability are now excluded from this measure. roportional net costs are also expected to decrease by approximately million.

perating cash flows will increase and financing cash flows will decrease by approximately million as repayment of the principal portion of the lease liabilities will be classified as cash flows from financing actiities. ree cash is expected to remain consistent under the new standard and an adustment will be made in the calculation to deduct the portion of cash flows that will be classified as financing.

The Group plans to adopt the modified retrospectie approach to adoption. Accordingly the new standard will be adopted without restating comparatie information and will be recognised in the opening balance sheet on uly .

roportional TA roportional net costs and free cash are measures used to assess executie performance and targets will be adusted to factor in the impact of changes from the new standard.

The interpretation clarifies how to apply the standard on income taxes AA anuary uly Uncertainty over income tax treatment when an entity has to consider recognise and measure the accounting impact of tax uncertainties.

anagement has undertaen an assessment of the impact of this interpretation and does not believe that the impact will be material based on the Group’s tax positions at une .

The AA has made limited scope amendments to AA Consolidated financial anuary uly Amendments to Australian statements and AA Investments in associates and joint ventures. The Accounting Standards—Sale amendments clarify the accounting treatment for sales or contribution of assets or Contribution of Assets between an inestor and its associates or oint entures. They confirm that the between an Investor and its accounting treatment depends on whether the nonmonetary assets sold or Associate or Joint Venture contributed to an associate or joint venture constitute a ‘business’ (as defined in AA Business Combinations. here the nonmonetary assets constitute a business the inestor will recognise the full gain or loss on the sale or contribution of assets. f the assets do not meet the definition of a business the gain or loss is recognised by the inestor only to the extent of the other investor’s inestors in the associate or oint enture. The amendments apply prospectiely.

Amendments were made to the following accounting standards as part of the anuary uly Annual improvements Annual mproements ycle 2015–2017 Cycle  AA Business Combinations and AA Joint Arrangements to clarify that an entity remeasures its preiously held interest in a oint operation when it obtains control of the business  AA Income Taxes to clarify that an entity accounts for all income tax consequences of diidend payments according to where the entity originally recognised the past transactions or eents that generated the distributable profits  AA Borrowing Costs to clarify that an entity treats any borrowing originally made to deelop a qualifying asset as part of general borrowings when the asset is ready for its intended use or sale. anagement has undertaen an assessment of the impact of this standard and does not beliee that the impact will be material to the Group.

only use personal For

Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements ransurban oldins imited ection otes to the consolidated financial statements 99 for the ear ended une

asis of preparation (continued

ountin standards and interpretations issued ut not yet eetive (ontinued)

mendments to revise the definition of a business o be considered a anuary uly business an acuisition would have to include an input and a substantive process that — toether sinificantly contribute to the ability to create outputs he new uidance provides a framewor to evaluate when an input and a substantive process are present o be a business without outputs there will need to be an oranised worforce

he chanes to the definition of a business will liely result in more acuisitions bein accounted for as an asset acuisition

pplication of the new standard is prospective for acuisitions followin the application date by the Group he chanes to the standard are not expected to materially impact the Group mendments are primarily to and to refine the definition of anuary uly material and its application by improvin the wordin and alinin the definition across — tandards and other publications pplication of the definition is not expected to sinificantly impact the Group he nternational ccountin tandards oard ( has issued the revised anuary uly onceptual ramewor for inancial eportin he primary purpose of the ramewor is to assist the (and the nterpretations ommittee in identifyin concepts that it will use when settin accountin standards

mendments were made to apply new definition and reconition criteria for assets liabilities income and expenses and other relevant financial reportin concepts he revised ramewor will be used in future standardsettin decisions but no chanes have been made to existin nternational inancial eportin tandards

formal assessment is yet to be completed on the impact of the revised ramewor on the Group however manaement does not believe there will be a sinificant impact iven there is no chane to existin nternational inancial eportin tandards detailed formal assessment is under way

ritia aountin estiates and judeents stimates and udements are reularl ealuated b manaement and are based on historical eperience and other factors includin epectations of future eents that ma hae a financial impact on the roup and that are belieed to be reasonable under the circumstances. he estimates and assumptions that hae a sinificant ris of causin a material adustment to the carrin amounts of assets and liabilities are found in the followin notes

 ncome taes ote  air alue of deriaties and other financial instruments ote  ecoerabilit of oodwill other intanibles assets and euit accounted inestments oncession ummar  onstruction ris of assets under construction ote  roision for maintenance ependiture ote  aluation of construction liabilit ote  aluation of promissor notes and concession notes ote  ssessment of control of ote

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 100 ection otes to the consolidated financial statements ransurban oldins imited for the ear ended une

peratin perorane

ement information

n the sement information proided to the ransurban roup ecutie ommittee certain members of which act as the chief operatin decision maer sements are defined b the eoraphical reion in which the roup operates bein elbourne dne risbane and orth merica. he roups corporate function is not an operatin sement under the reuirements of as its reenue eneratin actiities are onl incidental to the business.

he ecutie ommittee assesses the performance of the reion based on a measure of proportional earnins before depreciation amortisation net finance costs and income taxes (‘Proportional EBITDA’). This reflects the contribution of each region in the Group in the proportion of ransurbans euit ownership.

inificant items are those items where their nature is sufficientl sinificant to the financial statements and not in the ordinar course of business. efer to note for further details.

he diaram below shows the assets included in each eoraphical reion toether with the ownership interests held b the roup for the current financial ear

ane ove is press ityin press Tunne otoray anes () anes () () () () est ate ross ity Tunne Tunne () () ()

astern nterin oan ateay istriutor otoray otoray otoray () () () ()

o eteen e

ride () () eay ay irportin

() ()

estonne estin () ()

estonne ortonne () () estonne in ()

Express anes and the redericsburg Extension are included in Express anes. otora additional euit interest of . as acuired on eptember raising the euit interest to . and moing the inestment from non oned and euit accounted to the non oned and consolidated categor. An additional euit interest of . as acuired on December bringing the euit onership interest to .. estlin and orthonnex form the orthestern oads Group (G). WCX (Transurban’s effective ownership of WCX is 25.5%) was acquired on 27 September 2018 through the TP . There are three estonnex concessions comprising and in. The concession includes the existing East the e (East) and ill include the existing est from December . The est concession is currentl under concession to Interlin oads Pt td until the current concession expiration date in December .

For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban odings imited Section otes to the consoidated financia statements 101 8 08 1 2 for the ear ended 0 une 201

ement information (continued

Seent inoration—proportiona inoe stateent

oll revenue – ther revenue Tota proportiona revenue nderlyin proportional ( inificant items – ( – ( – (

oll revenue – ther revenue Tota proportiona revenue nderlyin proportional ( inificant items – – – ( – (

eoniiation o seent inoration to statutory inania inoration The proportiona resuts presented above are different from the statutor financia resuts of the roup due to the proportiona presentation of each asset’s contribution to each geographical region and other adustments reating to the contribution of revenue and the treatment of the financia income received in reation to the 25 avaiabiit paments and guaranteed to income arrangements. Construction revenue and construction costs are aso ecuded from proportiona resuts.

ement revenue evenue from eterna customers comprises to service and fee revenues earned on to roads. Segment revenue reconcies to tota statutor revenue as foows

dd evenue attributable to noncontrollin interests onstruction revenue from road development activities ntraroup elimination ess roportional revenue of non owned euity accounted assets ( ( oll revenue receipts on relatin to concession financial asset ( ( ther revenue receipts on relatin to concession financial asset ( (

tatutor reenue recognise in relation to arrangeents ith the euit accounte inestents that are eliinate or segent purposes he ecutie oittee ebers acting as the chie operating ecision aer assesses the perorance o the roup using proportional results that inclue incoe streas relating to aailabilit paents an guarantee toll incoe hich are classiie as reenue ithin the proportional results hese reenues or part o the orinar actiities o the asset an are relectie o its unerling perorance or statutor accounting purposes a portion o these incoe streas are inclue in inance incoe see note ith the balance relating to cash receie or the relate concession inancial asset receiable see note

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 102 ection otes to the consoliate inancial stateents ransurban olings iite or the ear ene une

roportional reconciles to proitloss beore incoe ta as ollos

– –

efer to note B for further information. The ecutive ommittee members acting as the chief operating decision maer assesses the performance of the Group using proportional results that include A5 income streams relating to availability payments and guaranteed toll income which are classified as revenue within the proportional results. These revenues form part of the ordinary activities of the A5 asset and are reflective of its underlying performance. or statutory accounting purposes, a portion of these income streams are included in finance income see note B1 with the balance relating to cash received for the related concession financial asset receivable see note B1.

The Group adopted AASB 15 Revenue from Contracts with Customers from 1 uly 1 on a fully retrospective basis. AASB 15 establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. AASB 15 supersedes a number of current revenue standards, including AASB 11 Revenue, AASB 111 Construction Contracts and associated nterpretations.

The Group’s principal revenue generating activities, being the service concession arrangements, are accounted for in accordance with AASB nterpretation 1 Service Concession Arrangements 1, which specifies that the construction services and operation or maintenance services provided under the Group’s service concession arrangements are two distinct types of services.

The Group concluded that there is no material change to the presentation, recognition, and measurement of revenue as a result of the transition to AASB 15 and conseuently, the information presented for the prior comparative period has not been restated.

The Group’s service concession arrangements fall into two types of models, the intangible asset model and the financial asset model as discussed below.

— The revenue streams covered by this model are Toll revenue and onstruction revenue. evenue recognition principles for these revenue streams are discussed below

For personal use only use personal For

Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban oldings imited Section B otes to the consolidated financial statements 103 AB 1 for the year ended une 1

— The Group’s accounting policy for service concession arrangements under the financial asset model when applying AASB 15 Revenue from Contracts with Customers has not changed and is consistent with that disclosed at note B1 oncession financial asset. As at une 1, the Group’s concession financial assets relate only to A25.

Toll revenue for the year ended une 1 is recognised net of revenue share of million 1 million to the grantor of A5, inistry of Transport of uebec T.

ther revenue includes management fee revenue, roaming fees and advertising revenue, and is recognised at the point in time the service is provided.

nterest income see note B1 from receivables and ban deposits is recognised using the effective interest method.

Significant items are items where their nature is sufficiently significant to the financial statements and not in the ordinary course of business. Such items included within the Groups results are detailed below

– – – – – – – – – – – – –

1. These costs are included within proportional BTA for segment reporting. efer to the definition of proportional BTA at note B Segment information.

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 104 ection otes to the consolidated financial statements Transuran oldings imited for the year ended une 2 A 2

– – – – –

On 22 December 2017, the US Tax Cuts and Jobs Act (“the Tax Act”) was signed into la. ncluded in the Ta Act as a change to the ederal orporate Ta ate from 5 to 2. All deferred ta alances related to the operations of the Group ere adusted to the loer enacted ta rate from anuary 2 resulting in an income ta epense of 2 million eing recorded for the year ended une 2. There ere no changes to the tate orporate Ta ate for the tate of irginia.

The Group’s accounting policy is to record deferred tax assets for carry forard unused ta losses and unused ta credits to the etent that it is proale that future taale profit ill e availale against hich unused ta losses can e utilised prior to epiry if applicale.

uring the year ended une 2 the Group undertoo a revie of its unooed ta losses in conunction ith updated forecast financial information of the relevant entities in the Group. As a result the Group determined it is proale future taale profit ill e availale to utilise previously unbooked tax losses in the Group’s US operations prior to their expiry. Accordingly, an additional deferred tax asset of 5 million as recorded as at ecemer 2. The alance remains recoverale at une 2.

ncluded in the overunder provision for the year ended une 2 is a million adustment to the ta ase for the egacy ay concession asset folloing confirmation in the period of the availaility of certain deductions that eisted at the acuisition date of Transuran ueensland in

2. For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban oldings imited Section otes to the consolidated financial statements 105 A 0 1 2 for the year ended 0 June 201

– – – – – – –

– – – – –

The income tax expense(benefit) for the period is the tax payable or benefit on the current periods taxable income based on the applicable income tax rate for each urisdiction, adusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax expense is calculated on the basis of the tax laws enacted or substantiely enacted at the end of the reporting period in the countries where the Company operates and generates taxable income. anagement periodically ealuates positions taken in tax returns with respect to situations in which applicable tax regulation is subect to interpretation. t establishes proisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

The Transurban stapled group comprises two corporate entities (T and T) and a trust (TT). TT operates as a flowthrough trust, and is not liable to pay tax itself. nstead, security holders pay tax on the distributions they receie from the trust at their indiidual marginal tax rates. The Group is structured in this way because the initial heay capital inestment and associated debt funding reuired for infrastructure inestments results in accounting losses being generated in the initial years which would otherwise preent a company from paying diidends. The trust enables distributions to be made to security holders throughout the life of the asset.

Deferred income tax is proided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. oweer, deferred income tax is not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that hae been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts

For personal use only use personal For will be aailable to utilise those temporary differences and losses.

Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of inestments in foreign operations where the Company is able to control the timing of the reersal of the temporary differences and it is probable that the differences will not reerse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Section B: Notes to the consolidated financial statements Transurban Holdings Limited 20 for the year ended 30 June 2019 ABN 86 098 143 429

Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 106 Section B: Notes to the consolidated financial statements Transurban Holdings Limited 20 for the year ended 30 June 2019 ABN 86 098 143 429

B7 Income tax (continued)

Accounting policy (continued) CurrentB7 Income and deferred tax (continued)tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. Accounting policy (continued) CurrentInvestment and deferred allowances tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or Companiesdirectly in equity. within the Group may be entitled to claim special tax deductions for investments in qualifying assets (investment allowances). The Group accounts for such allowances as tax credits, which means that the allowance reduces income tax payable and current tax expense. A Investmentdeferred tax asset allowances is recognised for unclaimed tax credits that are carried forward as tax losses. Companies within the Group may be entitled to claim special tax deductions for investments in qualifying assets (investment allowances). The TaxGroup consolidation accounts for such legislation allowances as tax credits, which means that the allowance reduces income tax payable and current tax expense. A Thedeferred Transurban tax asset Group is recognised has adopted for unclaimed the Australian tax credits tax consolidation that are carried legislation forward for as THL tax and losses. its wholly -owned Australian entities from 1 July 2005.

AllTax entities consolidation within the legislationAustralian tax consolidated groups continue to account for their own current and deferred tax amounts. These tax amounts areThe measuredTransurban as Group if each has entity adopted in the taxthe consolidationAustralian tax groupconsolidation is a separate legislation taxpayer for THL within and the its tax wholly consolidated-owned Australian group. entities from 1 July 2005.

AllThe entities tax consolidated within the Australiangroups within tax consolidatedthe Group are groups summarised continue as to follows: account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidation group is a separate taxpayer within the tax consolidated group.

The tax consolidated groups within the Group are summarised as follows:

TRANSURBAN GROUP

T TT T

ransuran THL TRANSURBAN QUEENSLAND e TAX GROUP ueensland (TQ) TAX GROUP irport Finance S T otoray ty td Cityin imited ransuran oldins 1 1 astern ransuran elourne ateay imited imited ty imited otoray istriutor Re Finance Co oldins C Cityin ty imited ty imited ateay he ills ransuran otoray otoray Finance nterlin Roads TS imited Company perations ty imited S T ty imited ills 2 ty imited otoray o eteen oan ride otorays ransuran C R Roam ty imited ty imited ollin oan oldins nc C ty imited otoray perations Capital eltay CC ty imited Co press C ty imited ollaust ty imited ty imited eacy ay 9 press CC irportlin anes1

9 press ransuran anes C 9 Co press ty imited anes1

Concession 2 21 Entity is classified as a partnership for tax purposes. There are no tax groups under THT.

Entity is classified as a partnership for tax purposes. There are no tax groups under THT.

For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban oldings imited Section otes to the consolidated financial statements 107 A 0 1 2 for the year ended 0 June 201

The entities in the THL tax consolidated group entered into a tax sharing agreement (‘TSA’) effective from 2 April 200.

The entities in the THL tax consolidated group have also entered into a tax funding agreement (‘TFA’) effective from 1 July 2008. Under the TA the whollyowned entities fully compensate T for any current tax payable assumed and are compensated by T for any current tax receiable and deferred tax assets relating to tax losses. The funding amounts are determined by reference to the amounts recognised in the whollyowned entities’ financial statements.

The amount receiablepayable under the TA is calculated at the end of the financial year for each whollyowned entity. T determines and communicates the amount payablereceiable to each whollyowned entity along with the method of calculation and any other information deemed necessary.

The entities in the Transurban Queensland Holdings 1 Pty Ltd (‘TQH1’) tax consolidated group entered into a TSA effective from 2 July 201. The entities in the T1 tax consolidated group hae also entered into a TA effectie from 2 July 2014. APL Hold Co Pty Ltd (‘AirportlinkM7’) and its controlled entities entered the Transurban ueensland tax consolidated group effectie from 2 oember 201.

Under the TA the whollyowned entities fully compensate T1 for any current tax payable assumed and are compensated by T1 for any current tax receiable and deferred tax assets relating to tax losses. The funding amounts are determined by reference to the amounts recognised in the whollyowned entities financial statements.

The amount receiablepayable under the TA is calculated at the end of the financial year for each whollyowned entity. T1 determines and communicates the amount payablereceiable to each whollyowned entity along with the method of calculation and any other information deemed necessary.

The entities in the Airport Motorway Holdings (‘AMH’) tax consolidated group entered into a TSA effective from 2 July 2009. The entities in the A tax consolidated group hae also entered into a TA effectie from 2 July 200.

Under the TA the whollyowned entities fully compensate A for any current tax payable assumed and are compensated by A for any current tax receiable and deferred tax assets relating to tax losses. The funding amounts are determined by reference to the amounts recognised in the whollyowned entities financial statements.

The amount receiablepayable under the TA is calculated at the end of the financial year for each whollyowned entity. A determines and communicates the amount payablereceiable to each whollyowned entity along with the method of calculation and any other information deemed necessary.

nterlink oads ty imited is a standalone tax entity.

The entities in the Transurban International Limited (‘TIL’) tax consolidated group entered into a TSA effective from 1 July 201. The entities in the T tax consolidated group hae also entered into a TA effectie from 1 July 201.

Under the TA the whollyowned entities fully compensate T for any current tax payable assumed and are compensated by T for any current tax receiable and deferred tax assets relating to tax losses. The funding amounts are determined by reference to the amounts recognised in the whollyowned entities financial statements. The amount receiablepayable under the TA is calculated at the end of the financial year for each whollyowned entity. T determines and communicates the amount payable receiable to each whollyowned entity along with the method of calculation and any other information deemed necessary.

Transurban DRIVe Holdings LLC (‘TDH’) is the head company of the DRIVe tax consolidated group. The DRIVe tax consolidated group is

For personal use only use personal For consolidated for US tax purposes in the sense that the 100 subsidiaries of TD hae elected to be treated as disregarded entities for US tax purposes. This treatment means that those entities are ignored for US tax purposes and that TD, as head entity, carries any tax liability or benefits arising in the group. The De tax consolidated group currently owns partnership interests in both xpress anes and xpress Lanes and includes its share of each asset’s profits or losses in its US tax return. Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 108 Section otes to the consolidated financial statements Transurban Holdings Limited for the year ended 0 June 2019 A 8 098 14 429

Transurban (USA) Holdings LLC (‘TUSAH’) is the head company of the TUSAH tax consolidated group. The TUSAH tax consolidated group owns the remaining partnership interests in both 495 Express Lanes and 95 Express Lanes and includes its share of each asset’s profits or losses in its US tax return.

Concession A2 LP (A2 LP) is treated as a partnership for tax purposes and is the main operating entity of the A2 roup. The partners of A2 LP includes its share of A25 LP’s profits or losses in its Canadian tax return.

Goods and Services Tax (‘GST’) Revenues expenses and assets are recognised net of the amount of associated ST unless the ST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acuisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of ST receivable or payable. The net amount of ST recoverable from or payable to the taxation authority is included with other receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The ST components of cash flows arising from investing or financing activities which are recoverable from or payable to the taxation authority are presented as operating cash flows.

For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban Holdings Limited Section otes to the consolidated financial statements 109 A 9 4 429 for the year ended une 29

The Group’s working capital balances are summarised as follows:

rren asses

– rren iaiiies

as and cas eivaens or the purpose of presentation in the consolidated statement of cash flos cash and cash euialents includes cash on hand deposits held at call ith financial institutions other shortterm highly liuid inestments ith original maturities of three months or less that are readily conertible to non amounts of cash and hich are subect to an insignificant ris of changes in alue and ban oerdrafts. an oerdrafts are shon ithin borroings in current liabilities. All cash balances are interest bearing.

The amount shon in cash and cash euialents includes 5 million not aailable for general use at une 29 (2 million) of hich 422 million (2 24 million) belongs to TL. This comprises amounts reuired to be held in a construction account maintenance and funding reseres and prepaid tolls hich are not aailable for general use.

Current held to maturity inestments as shon in the table aboe are shortterm inestments in US goernment treasuries that are due to mature ithin 2 months hich management intends to hold to maturity.

Trade receivaes Trade receiables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components in hich case hen they are recognised at fair alue. The group holds the trade receiables ith the obectie to collect the contractual cash flos and therefore measures them subseuently at amortised cost using the effectie interest method. Trade receiables are generally due for settlement no more than days from reenue recognition.

The roup applies the AAS 9 simplified approach to measuring expected credit losses hich uses a lifetime expected loss alloance for all trade receiables. The expected loss rates are based on the payment profiles of toll reenue oer historical periods and the corresponding historical credit losses experienced ithin this period. The historical loss rates are adusted to reflect current and forard looing information on macroeconomic factors affecting the ability of the customers to settle the receiables. The roup has identified the P and the unemployment rate of the countries in hich it operates to be the most releant factors and accordingly adusts the historical loss rates based on expected changes in these factors.

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 110 ection : otes to the consolidated financial statements Transurban oldings imited for the ear ended une

Trade receivaes (conined) n that basis the loss allowance as at une and ul on adoption of was determined as follows for trade receiables:

– ot applicable

The closing loss allowances for trade receiables as at une reconciles to the opening loss allowance as follows:

ne —cacaed nder S — – —

Trade receiables are written off when there is no reasonable epectation of recoer ndicators that there is no reasonable epectation of recoer include the failure of a debtor to engage in a repament plan with the Group and a failure to make contractual paments for an etended period Previous impairment accounting policy under AASB 139 ollectabilit of trade receiables was reiewed on an ongoing basis ebts which are known to be unrecoerable are written off b reducing the carring amount of trade debtors directl n allowance for impairment is used when there is eidence that the Group will not be able to collect all amounts due according to the original terms of the receiables The amount of the allowance for impairment is the difference between the carring amount and the amount epected to be recoerable The additional amount of the allowance for doubtful debtors is recognised in profit or loss

s at une the Group held an allowance for doubtful debtors of million recognised for current trade receiables that were considered potentiall unrecoerable s at une trade receiables of million were oerdue but the Group concluded that these oerdue amounts would be receied in full

er inancia asses a aorised cos

The group classifies its financial assets at amortised cost onl if both of the following criteria are met:

 the asset is held within a business model whose obectie is to collect the contractual cash flows and

 the contractual terms gie rise to cash flows that are solel paments of principal and interest For personal use only use personal For

Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements 111

million (2018: $246 million) relating to the State of Victoria’s contribution for the design and

to the Group’ With the exception of a subset of other receivables recorded at amortised cost, the Group’s other financial assets at ‘ ’

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 112 Section : otes to the consolidated financial statements ransurban oldings imited for the ear ended 0 une 201 86 08 14 42

– – –

– – – – – –

1 otal declared 18 is $1,18 million otal declared 1 is $1, million

For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements ransurban oldings imited Section : otes to the consolidated financial statements 113 86 08 14 42 for the ear ended 0 une 201

he Group sees to align distributions ith free cash he Group calculates free cash as follos:

(‘NWRG’) –

rom the date of the W acuisition debt amortisation from West (ransurban proportional share) are also added bac to this figure due to the West concession arrangement being transferred to the W onership consortium at the end of the current West concession arrangement in 2026, in hich ransurban holds a 2 onership interest otora dividends and termloan notes interest received of $1 million is adusted for debt amortisation of $8 million from 1 ctober 2018 he eighting applied to securities is based on their eligibilit for distributions during the ear and is conseuentl different to eighted average securities calculated at note arnings per stapled securit

( )

raning credits available for subseuent periods relate to irport otora oldings t td $11 million (2018: $12 million), ransurban oldings imited $21 million (2018: $ million) and nterlin oads t td $4 million (2018: $nil)

provision for distribution is recognised for an distribution declared and authorised on or before the end of the reporting period, but not distributed b the end of the reporting period hese distributions are provided for once the are approved b the oard, are announced to euit holders and are no longer at the discretion of the entit

ovements in the distribution provision during the financial ear are set out belo:

For personal use only use personal For () () () () – () () () () () – ()

Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 114 Section : otes to the consolidated financial statements ransurban oldings imited for the ear ended 0 une 201 86 08 14 42

Stapled securities are classified as euit and entitle the holder to participate in distributions and on inding up of the Group in proportion to the number of securities held ver holder of a stapled securit present at a meeting, in person or b prox, is entitled to one vote he issued units of the Group are made up of a parcel of stapled securities, each parcel comprising one share in , one unit in and one share in he individual securities comprising a parcel of stapled securities cannot be traded separatel

ther contributed euit units attributable to securit holders of the Group relating to and of $1,4 million and $22 million respectivel (2018: $12,24 million and $6 million respectivel) is included ithin noncontrolling interests—

R

() – () R ̶ () – – () – () – – – () – () – – – – R ̶ () – () – () – – – – () () () – – – ()

G ( )

G

G

For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements 115

– – – –

— — – — — –

(‘TIFIA’)

For personal use only use personal For

Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 116

()

 adian dollars to provide a balance sheet hedge for Transurban’s Canadian dollar investment in the A25.

edge for Transurban’s Canadian dollar investment in the A25

Corporate issued €600 milli

For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban oldings imited ection otes to the consolidated financial statements 117 A 6 0 2 for the ear ended 0 une 20

Credit facilities are provided as part of the overall debt funding structure of the roup. The dran component of each facilit is shon belo

– – –

— – — — — — — – –

— — — — — — — — — — — — —

This represents final maturit. et capitalised costs paid have been offset b 2m of rivate activit bonds As premiums received during .

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 118 ection otes to the consolidated financial statements Transurban oldings imited for the ear ended 0 une 20 A 6 0 2

— – — — — — — — — — — — — — – — — – — — — — — — – — — — — — — – — — – — —

— – — — – — – — — — – — — – — — —

. This facilit as reduced b 5m during . 2. These facilities reuire principal repaments throughout their life ith 0m due ithin one ear of 0 une 20 and are classified as current borroings.

For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban oldings imited ection otes to the consolidated financial statements 119 A 6 0 2 for the ear ended 0 une 20

— —

— – — —

This represents final maturit. These facilities reuire principal repaments throughout their life ith the first of such pament due in 20 for 5 press anes and 205 for 5 press anes. A portion of these shareholder loan notes as repaid during and .

 The corporate facilities are secured b first raning charges granted b Transurban inance Compan t td Transurban inance Trust Transurban oldings imited Transurban olding Trust Transurban nternational imited and Transurban imited and  The Transurban ueensland inance facilit is secured against the respective rights of Transurban ueensland oldings t imited Transurban ueensland oldings 2 t imited Transurban ueensland nvest Trust and their assets. At 0 une 20 the facilit as undran.

 A corporate secured uro edium Term ote T program as established in ctober 20 ith a program limit of 2 billion hich increased to 5 billion in a 205. nder the program the roup ma from time to time issue notes denominated in an currenc. These facilities are secured b first raning charges granted b Transurban inance Compan t td Transurban inance Trust Transurban oldings imited Transurban olding Trust Transurban nternational imited and Transurban imited  The corporate A notes are secured b first raning charges granted b Transurban inance Compan t td Transurban inance Trust Transurban oldings imited Transurban olding Trust Transurban nternational imited and Transurban imited  The Airport otora Trust domestic bond as secured against the respective rights of Airport otora imited and Airport otora Trust and their assets  The Transurban ueensland inance domestic bonds are secured against the respective rights of Transurban ueensland oldings t imited Transurban ueensland oldings 2 t imited Transurban ueensland nvest Trust and their assets  A Transurban ueensland inance T program as established in arch 206 ith a program limit of 2 billion. nder the program Transurban ueensland inance ma from time to time issue notes denominated in an currenc. These notes are secured against the respective rights of Transurban ueensland oldings t imited Transurban ueensland oldings 2 t imited Transurban ueensland nvest Trust and their assets  The 5 Express Lanes Private Activity Bonds (‘PABs’), including the PABs issued in relation to the 395 Express, are secured against the rights of 5 press anes C and its assets and  The 5 press anes As are secured against the rights of Capital elta press C and its assets.

 Corporate .. private placement facilities are secured b first raning charges granted b Transurban inance Compan t td Transurban

For personal use only use personal For inance Trust Transurban oldings imited Transurban olding Trust Transurban nternational imited and Transurban imited  The Transurban ueensland inance . private placement facilities are secured against the respective rights of Transurban ueensland oldings t imited Transurban ueensland oldings 2 t imited Transurban ueensland nvest Trust and their assets and  The Cardinal old Co Canadian otes ere a rivate lacement issuance and are secured against the rights of Transurban Cardinal oldings td. Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 120 ection B otes to the consolidated inancial stateents ransuran oldings Liited or the year ended 3 une 9 AB 9 3 9

 he Airport otoray acility is secured against the respective rights o Airport otoray Liited, the Airport otoray rust and their assets  he ills otoray rust acilities are secured against the respective rights o ills otoray Liited, ills otoray rust and their assets  he Lane ove unnel acility is secured against the respective rights o LE Pty Liited, LE rust and their assets  he ross ity unnel acility is secured against the respective rights o ransuran Pty Liited, ransuran rust and their assets  he 5 otoray acility is secured against the respective rights o nterlin oads Pty Liited and their assets  he ransuran ueensland inance acilities are secured against the respective rights o ransuran ueensland oldings Pty Liited, ransuran ueensland oldings Pty Liited, ransuran ueensland nvest rust and their assets and  he A5 credit acility is secured against the respective rights o oncession A5 unding Liited and oncession A5, LP and their assets

Transportation Infrastructure Finance and Innovation Act (‘TIFIA’)  he 95 Express Lanes A acility is secured against the rights o apital Beltay Express LL and its assets and  he 95 Express Lanes A acility is secured against the rights o 95 Express Lanes LL and its assets

ation Infrastructure Bank (‘VTIB’)  he 95 Express Lanes B acility is secured against the rights o 95 Express Lanes LL and its assets

 he loans to ransuran ueensland ro the acuisition consortiu partners are unsecured  he loans to 5 otoray ro the noncontrolling interests are unsecured

– – – – – –

einanced in uly 9 through to August he general credit acility covers corporate reuireents including credit card acilities, online aning and an overdrat acility 3 einanced in uly 9 through to anuary

here are no clais against any o the issued letters o credit and thereore no liaility is recorded ( nil)

A nuer o the roups consolidated orroings include inancial covenants, hich are listed elo here have een no reaches o any o these covenants during the year

only use personal For

Based on the balance sheet as at 30 June 2019, the Group’s average closing security price over 20 consecutive business days would need to be below 201 392 per security to trigger this clause

Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements ransurban oldings iited ection B otes to the consolidated inancial stateents 121 B 09 13 29 or the year ended 30 June 2019

onecourse et

erivatives

— – – – — – – —

— – — – – – — –

Accountin poic erivatives are initially recognised at air value on the date a derivative contract is entered into and are subseuently reeasured to their air value at the end o each reporting period he accounting or subseuent changes in air value depends on whether the derivative is designated as a hedging instruent, and i so, the nature o the ite being hedged he Group designates certain derivatives as either

 hedges o the air value o recognised assets or liabilities or a ir coitent air value hedges  hedges o a particular ris associated with the cash lows o recognised assets and liabilities and highly probable orecast transactions cash low hedges or  hedges o a net investent in a oreign operation net investent hedges t the inception o the hedging transaction the Group docuents the relationship between the hedging instruents and hedged ites, as well as its ris anageent obective and strategy or undertaing various hedge transactions he Group also docuents its assessent, both at hedge inception and on an ongoing basis, o whether the derivatives that are used in hedging transactions have been and will continue to be highly eective in osetting changes in air values or cash lows o hedged ites hen orward contracts are used to hedge orecast transactions, the Group generally designates the entire air value o the orward contract as the hedging instruent

he air values o various derivative inancial instruents used or hedging purposes are disclosed in this note oveents in the cash low hedging reserve in euity are shown in note B12 he ull air value o a hedging derivative is classiied as a noncurrent asset or liability when the reaining aturity o the hedged ite is ore than 12 onths

For personal use only use personal For hanges in the air value o derivatives that are designated and ualiy as air value hedges are recorded in proit or loss, together with any changes in the air value o the hedged asset or liability that are attributable to the hedged ris he gain or loss relating to the eective portion o interest rate swaps and cross currency swaps hedging ied rate borrowings is recognised in proit or loss within inance costs, together with changes in the air value o the hedged ied rate borrowings attributable to interest rate ris he gain or loss relating to the ineective portion is recognised in proit or loss

the hedge no longer eets the criteria or hedge accounting, the adustent to the carrying aount o a hedged ite or which the eective interest ethod is used, is aortised to proit or loss over the period to aturity using a recalculated eective interest rate Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 122 ection B otes to the consolidated inancial stateents ransurban oldings iited or the year ended 30 June 2019 B 09 13 29

Accountin poic (continued) he eective portion o changes in the air value o derivatives that are designated and ualiy as cash low hedges is recognised in other coprehensive incoe and accuulated in reserves in euity he gain or loss relating to the ineective portion is recognised iediately in proit or loss

ounts accuulated in euity are reclassiied to proit or loss in the periods when the hedged ite aects proit or loss

hen a hedging instruent epires or is sold or terinated, or when a hedge no longer eets the criteria or hedge accounting, any cuulative gain or loss eisting in euity at that tie reains in euity and is recognised when the orecast transaction is ultiately recognised in proit or loss hen a orecast transaction is no longer epected to occur, the cuulative gain or loss that was reported in euity is iediately transerred to proit or loss

edges o net investents in oreign operations are accounted or siilarly to cash low hedges

ny gain or loss on the hedging instruent relating to the eective portion o the hedge is recognised in other coprehensive incoe and accuulated in reserves in euity he gain or loss relating to the ineective portion is recognised iediately in proit or loss

Gains and losses accuulated in euity are included in proit or loss when the oreign operation is partially disposed or sold

ertain derivative instruents do not ualiy or hedge accounting hanges in the air value o any derivative instruent that does not ualiy or hedge accounting are recognised iediately in proit or loss

edin strate and instruents used te roup he Group uses derivative inancial instruents in the noral course o business in order to hedge eposures to luctuations in interest rates and oreign echange rates in accordance with the Group’s financial risk management policies. The Group’s policies allow derivative transactions to be undertaen or the purpose o reducing ris and do not perit speculative trading he instruents used by the Group are as ollows

— The Group uses interest rate swap contracts to manage the Group’s exposure to variable interest rates related to borrowings. nterest rate swap contracts currently in place cover 100 201 9 o the variable debt held by the Group ecluding woring capital acilities

— he Group currently uses orward echange contracts to protect against echange rate oveents between the and oreign currencies he Group has hedged a portion o its interest coitents and a portion o its capital ependiture coitents

— he Group has entered into crosscurrency interest rate swap contracts to reove the ris o unavourable echange rate oveents on borrowings held in oreign currencies nder these contracts, the Group receives oreign currency at ied rates and pays at either ied or loating rates he Group then uses the interest rate swap contracts to hedge the loating interest rate coitents bac to ied interest rates

urrently there is no right or basis to present any inancial assets or inancial liabilities on a net basis, and as such no inancial assets or inancial liabilities have been presented on a net basis in the Groups balance sheet at the end o the inancial year

ransurbans investent in its and anadian based assets 9 press anes and 9 press anes in the , 2 in anada act as a natural hedge against the exposure to foreign currency movements for a portion of the Group’s USD denominated borrowings and denoinated borrowings change dierences arising on the revaluation o these inancial instruents are recognised in proit or loss in the separate inancial stateents o the relevant subsidiaries n the Group inancial stateents these echange dierences are recognised in the oreign currency translation reserve in euity and will be transerred to proit or loss when the Group disposes its interest in either the or anadian based assetsonly use personal For s at 30 June 2019, the Group has deerred 1 illion in losses 201 91 illion losses related to echange dierences on the revaluation o inancial instruents and 10 illion in gains 201 illion gains related to echange dierences on the net assets o its and anadian assets

Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban oldings imited Section otes to the consolidated financial statements 123 for the year ended une

Financia risk anaeent The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk credit risk and liuidity risk. The financial risk management function is carried out centrally under the policies approved by the oard. The Group review operations actively to identify and monitor all financial risks and to mitigate these risks through the use of hedging instruments where appropriate. The oard is informed on a regular basis of any material exposures to financial risks. The Group continuously monitors risk exposures over time through review of cash flows price movements market analysis and ongoing communication within the Group. hen measuring financial risk the Group considers the positive and negative exposures existing hedges and the ability to offset exposures where possible.

arket risk The Group operates internationally and is exposed to foreign exchange risk when future transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. oreign currency exposures are viewed as either investment exposures or operating exposures. xposures from investments in foreign assets are generally managed using foreign currency debt. ll known material operating exposures out to months are hedged either using hedging instruments or are offset by drawing on foreign currency funds. The effects of the foreign currency related hedging instruments on the Group’s financial position and performance are as follows: et investent in forein operation—

et investent in forein operation—A

rosscurrenc interest rate saps

aturity profile—notional value of crosscurrency interest rate swaps are as follows

– – – – – For personal use only use personal For – – – – – – – –

. – ot applicable ased on average fixed rate of cross currency swap contracts which does not include any margins that may e applicale on the hedged det instrument. Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 124 ection : otes to the consolidated financial statements Transuran oldings imited for the year ended une

ffectiveness of hedging relationships designated

xposure to foreign currency risk at the reporting date denominated in the currency in which the risk arises was as follows:

– – – – – – – – – – – – – – – – – – – – –

ensitivity to exchange rate movements ased on the translation of financial instruments held at the end of the period is as follows:

– – – –

– – – –

– – – –

– – – –

– – – –

The Group revalues its foreign currency denominated orrowings each period using market spot rates and where these orrowings have een appropriately hedged defers these movements in the cash flow hedge reserve in euity. The volatility in the cash flow hedge reserve is caused mainlyonly use personal For y fair value movements of the crosscurrency interest rate swaps which are affected y changes in forward ustralian dollarforeign currency exchange rates.

Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transuran oldings imited ection : otes to the consolidated financial statements 125 for the year ended une

The Group’s main exposure to interest rate risk arises from cash and cash equivalents, and longterm orrowings. The Group manages interest rate risk y entering into fixed rate det facilities or y using interest rate swaps to convert floating rate det to fixed interest rates. Generally the Group raises long term orrowings at floating interest rates and swaps them into fixed interest rates that are lower than those availale if the Group orrowed at fixed rates directly. The Group’s policy is to hedge interest rate exposure in compliance with the covenant requirements of funding facilities and up to . t une (: %) of the Group’s interest rate exposure on variable rate borrowings was hedged.

The effects of the interest rate related hedging instruments on the Group’s financial position and performance are as follows:

aturity profile – notional value of interest rate swaps

– –

ased on average fixed rate of interest rate swap contracts, which does not include any margins that may be applicable on the hedged debt instrument

ffectiveness of hedging relationships designated

s at the reporting date, the Group had the following cash balances, variable rate borrowings and interest rate swap contracts outstanding:

ensitivity to interest rate movements based on variable rate cash balances, variable rate borrowings and interest rate swap contracts is as follows:

For personal use only use personal For –

Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 126 ection : otes to the consolidated financial statements Transurban oldings imited for the year ended une

The Group has no significant concentrations of credit risk from operating activities, and has policies in place to ensure that transactions are made with commercial customers with an appropriate credit history owever, as an operator of large infrastructure assets, the Group is exposed to credit risk with its financial counterparties through entering into financial transactions in the ordinary course of business These include funds held on deposit, cash investments and the market value of derivative transactions

The Group assesses the credit strength of potential financial counterparties using obective ratings provided by multiple independent rating agencies The oard approved policies ensure that higher limits are granted to higher rated counterparties The Group also seeks to mitigate its total credit exposure to counterparties by only dealing with credit worthy counterparties, limiting the exposure to any one counterparty, minimising the sie of the exposure where possible through netting offsetting exposures, diversifying exposures across counterparties, closely monitoring changes in total credit exposures and changes in credit status, and taking mitigating action when necessary

The Group maintains sufficient cash and undrawn facilities to maintain short term flexibility and enable the Group to meet financial commitments in a timely manner The Group assesses liquidity over the short term up to months) and medium term to years) by maintaining accurate forecasts of operating expenses, committed capital expenditure and payments to security holders ong term liquidity requirements are reviewed as part of the annual strategic planning process

hort term liquidity is managed by maintaining a strategic liquidity reserve This reserve is based on the Group’s forecast annual operating costs and certain risk exposure scenarios as maintained by the Group’s strategic risk register, and is maintained as cash and undrawn facilities The reserve is maintained on a rolling month basis edium term liquidity forecasting is maintained on a rolling five year horion

The Group had access to the following undrawn borrowing facilities at the end of the reporting period:

s at une , the Group has letter of credit facilities and general credit facilities in place with undrawn capacity of million : million) The facilities are committed for the duration of the facility and the undrawn portion cannot be withdrawn by the lenders without notice

The amounts disclosed in the table are the contractual undiscounted cash flows of the Group’s financial liabilities. For interest rate swaps, the cash flows have been estimated using forward interest rates applicable at the end of the reporting period

– – – – – – – – – –

The carrying value of the interest rate and crosscurrency swaps have been presented on a net basis The gross position is disclosed in the first table of note

– – – – –

For personal use only use personal For – – – – – – – – – –

The undrawn borrowing facilities include million million of undrawn borrowing facilities to provide funding for the Group’s capital projects. Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements ransurban oldings iited ection otes to the consolidated financial stateents 127 for the ear ended une

he Group is subject to a gearing ratio covenant iposed b senior secured lenders and it onitors capital on the basis of the gearing ratio to ensure copliance with the covenant. here have been no breaches of the covenant during the current financial ear. or further inforation refer to the orrowings note .

he Groups objectives when anaging capital is to safeguard its abilit to continue as a going concern and to aintain an optial capital structure to reduce the cost of capital so that it can continue to provide returns to securit holders and benefits for other staeholders.

The carrying value of the Group’s financial assets and liabilities approximate fair value. This is also generally the case with borrowings since either the interest paable on those borrowings is close to current aret rates or the borrowings are of a shortter nature. he fair values of non current borrowings are deterined based on discounted cash flows using a current borrowing rate. he are classified as level fair values in the fair value hierarch due to the use of observable inputs.

air value is categorised within the fair value hierarch based on the lowest level of input that is significant to the fair value easureent as a whole

 evel —uoted prices unadjusted in active arets for identical assets or liabilities  evel —inputs other than uoted prices included within level that are observable for the asset or liabilit either directl as prices or indirectl derived fro prices  evel —inputs for the asset or liabilit that are not based on observable aret data unobservable inputs. All of the Group’s financial instruments measured, recognised and disclosed at fair value were valued using market observable inputs evel . here were no transfers between levels during the period and there has been no change in the valuation techniues applied.

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 128 ection otes to the consolidated financial statements Transurban oldings imited for the year ended une A

The table below summarises the key balance sheet items of the Group’s concession assets by geographical region

– – – – – – –

– – – – – –

ssets uner construction are inclue within other intanible assets in the consoliate balance sheet

For personal use only use personal For

Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban olins imite ection otes to the consoliate financial statements 129 for the year ene une

Goowill primarily relates to the Groups yney etwork an risbane etwork an has arisen from the acuisition of ills otorway Group Tollaust ty imite an the yney oas Group in yney an the ueenslan otorways Group in risbane

The Group assesses whether there is an inication of impairment at each reportin perio an tests oowill for impairment on an annual basis rearless of whether an inicator of impairment eists

ecoerable amount is the reater of fair alue less costs to sell an alue in use or the purpose of assessin impairment assets are roupe at the lowest leels for which there are separately ientifiable cash inflows which are larely inepenent of the cash inflows from other assets or roups of assets casheneratin units

here the carryin amount of an intanible asset ecees its recoerable amount the asset is consiere impaire an is written own to its recoerable amount throuh profit or loss The ecrement in the carryin amount is reconise as an epense in profit or loss in the reportin perio in which the impairment occurs

The recoverable amount of the Group’s cash generating units G hae been etermine base on alueinuse calculations

The followin table sets out the key assumptions on which manaement has base its cash flow proections The calculations use year cash flow proections base on financial plans reiewe by the oar ash flows beyon this perio are moelle usin a consistent set of lonterm assumptions up to the en of the applicable concession perio

anaement has etermine the alues assine to each of the below key assumptions as follows

Based on historical trends and the Group’s long term traffic forecasting models

For personal use only use personal For

Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 130 ection otes to the consoliate financial statements Transurban olings imite for the ear ene une

B ther intangile assets

ost ccumulated amortisation –

ost ccumulated amortisation – –

– dditions – cuisition of susidiar – – oreign echange moements and other adustments – ransfers – – mortisation charge – – dditions cuisition of susidiar – – oreign echange moements and other adustments – ransfers – – mortisation charge –

oncession assets represent the Groups rights to operate roas uner ervice oncession rrangements ervice oncession rrangements are accounte for in accorance ith nterpretation ervice oncession rrangements hich establishes a frameor for classification of the assets base on an intangible asset moel an a financial asset moel bifurcate arrangements can also eist ssets uner construction are accounte for as contract assets in accorance ith evenue from ontracts ith ustomers until the are available for use The Group classifies assets uner construction base on hether the consieration provies rights to an intangible asset or a financial asset

ntangile asset model oncession assets that o not meet the criteria of the financial asset moel are classifie as intangible assets an are amortise on a straightline basis over the term of the concession arrangement

Transurban has the right to toll the concession assets for the concession perio tensions to the concession perio have been grante for a number of iniviual concessions as a result of roa evelopment proects an improvements t the en of the concession perio all concession assets are to be returne to the respective Government The remaining terms of the right to operate perio are reflecte belo

elourne—ictorian tate Goernment dne—e outh ales tate Goernment – – Brisane—ueensland tate Goernment and Brisane it ouncil – –

orthonly use personal For merica—ommonealth of irginia and inistr of ransport of ueec – –

uring the ear ene une the itin oncession ee in elbourne as amene an the concession en ate as etene from anuar to anuar itionall in relation to the controlling interest acuire for the otora in ne the concession en ate is ecember Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban olings imite ection otes to the consoliate financial statements 131 for the ear ene une

t each reporting perio the Group assesses hether there is an inication of impairment here an inicator of impairment is ientifie impairment testing is performed using the same approach as the Group’s annual goodwill impairment testing There ere no inicators of impairment as of une

n pril legislation an parliamentar consents came into effect in connection ith the est Gate Tunnel roect in elbourne The est Gate Tunnel roect is being fune b the right to toll from the amene itin oncession ee an the right to toll the est Gate Tunnel once construction is complete ith funing sources from the amene itin oncession ee confirme the Group has recognise an incremental asset uner construction an a corresponing liabilit of million as of pril The incremental asset an corresponing liability represents the Group’s obligation to complete the construction of the West Gate Tunnel attributable to the remaining itin funing sources paments iscounte to their present value uning sources in connection ith the itin oncession ee ill begin to be receive from ul at hich time the asset uner construction attributable to the itin funing sources ill begin to amortise through to the concession en ate of anuar There has been no change to the accounting for funing source paments attributable to future est Gate Tunnel tolling income an the incremental asset value is being recore progressivel as incurre

ssets uner construction at une inclue the construction of the est Gate Tunnel roect in elbourne the ogan nhancement roect in risbane an the press anes an reericsburg tension in orth merica

onstruction costs relating to complete ors are transferre to the concession asset upon final completion of the proects n the current perio this relate to costs associate ith the nner it pass in risbane

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 132 ection otes to the consolidated financial statements Transurban oldings imited for the year ended une

The Group’s financial assets relate only to as at une and une

– –

The financial asset model within applies to serice concession arrangements whereby the Group has an unconditional contractual right to receie cash or another financial asset as the consideration for the construction serices proided to the grantor of the concession The unconditional contractual right to receie cash or another financial asset arises under two scenarios

 the respectie Goernment authority guarantees to pay the Group specified amounts throughout the term of the concession arrangement such as aailability payments proided certain asset operating conditions are met or  the respectie Goernment authority guarantees to pay the Group any shortfall between amounts receied from users of the asset and an amount specified within the concession agreement guaranteed toll reenue arrangements

or amounts receied under these arrangements the traffic ris is not borne by the Group The portion of concession arrangements accounted for under the financial asset model in are presented as a financial receivable within the Group’s consolidated balance sheet. The group classifies its oncession financial assets at amortised cost as the objective of the Group’s business model is to collect the contractual cash flows and the contractual terms gie rise to cash flows that are solely payments of principal and interest pplying the epected credit loss model to the Group’s Concession financial assets at amortised cost resulted in il loss allowance being recorded loss allowance under at une was nil There hae been no moements impacting the loss allowance in the year ending une

The fair alue of the receiable is determined at the inception of the serice concession arrangement based on the discounted present alue of cash flows to be receied oer the concession life portion of the receiable is recognised with corresponding reenue recorded for construction serices based on the progress of the construction serices proided in each period ost completion of construction serices interest income is recorded to recognise the unwind of discounted future cash flows while also increasing the receiable balance mounts receied from the respectie Goernment authority are offset against the financial asset receiable

The concession assets of the asset in anada are accounted for using a bifurcated model being

 inancial asset model for the income streams of an unconditional contractual right to receie cash from T including the aailability payments and the minimum guaranteed toll income and  ntangible asset model for the remaining income streams see note

– – – –

only use personal For – – – – Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban oldins iited ection otes to the consolidated financial stateents 133 for the ear ended une

e Group’s maintenance and repair

The est Gate Tunnel roject is bein funded b tollin incoe fro the aended Citin Concession eed and the receipt of future tollin incoe fro the est Gate Tunnel roject. endents to the Citin Concession eed cae into effect in pril reuirin the reconition of an incremental asset and corresponding liability. The liability represents the Group’s obligation to complete construction of the est Gate Tunnel roject attributable to the reainin Citin fundin sources paents. The liabilit will reduce as paents are ade in connection with the Citin fundin sources.

The noinal value of the reainin fundin sources paents attributable to Citin is illion at une .

– – – – –

value, which is determined with reference to the Group’s

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 134 ection otes to the consolidated financial statements Transurban oldings imited for the year ended une

ther liailities—concession liailities

astern istriutor concession note otorwa promissor note redericsur tension paale –

The astern istributor proect deed beteen irport otoray imited irport otoray Trust and the e outh ales oads and aritime Services (‘RMS’) provides for annual concession fees of million during the construction phase and for the first years after completion of construction of the astern istributor. ntil a certain threshold return is achieed payments of concession fees due under the roect eed ill be satisfied by means of the issue of noninterest bearing concession notes.

The face alue of concession notes on issue at une is million million.

The ills otoray Trust has entered into leases ith the . nnual lease liabilities under these leases total million million indeed annually to the consumer price inde oer the estimated period that the otoray ill be used. ntil such time as a threshold return is achieed payments under these leases can be made at any time at the discretion of the trustee of the ills otoray by means of the issue of noninterest bearing promissory notes to the .

The face alue of promissory notes on issue at une is million million.

The press anes serice concession agreement as amended folloing commercial close of the redericsburg tension proect in pril . series of payments are due to the irginia epartment of Transportation T in connection ith the construction of the proect payable beteen commercial close and construction completion. s at une a current liability of million and a noncurrent liability of million has been recorded. The nominal alue of the payable is million.

Concession and promissory notes

he Group has noninterest earin lon term det, represented promissor notes and concession notes paale to the Government, measured at the present value of epected future paments he calculations to discount these notes to their present value are ased on the estimated timin and profile of the repaments ssumptions are made in determinin the timin and profile, ased on epected availale euit cash flows of the Groups cash eneratin units discount rate is used to value the promissor notes and concession notes to their present value, which is determined throuh reference to other facilities in the maret with similar characteristics discount rate of has een used for notes issued durin the period, which reconises the suordinated nature of these notes lower discount rate has een used in the current financial ear followin a review of discount rates applicale for liailities across the Group

For personal use only use personal For Section B: Notes to the consolidated Financial rsrfinancial statementsodis iied for the year ended 30 June 2019 Secio oes o e cosoided iciStatements sees 135 or e er eded e

Ssidiries re cosoided ro e de e rop is coro o e ssidir d re decosoided ro e de coro ceses

prepri e cosoided ici sees o e rop ierei rscios d ces ve ee eiied e ccoi poicies doped e idivid eiies coprisi e rop re cosise i e pre cop

 ocoroi ieres—oer eer ocoroi ieress rei o e ress d ei o rsr eesd M Moor d ser isrior ssidiries re so sepre i e rop ici sees  ocoroi ieress ree o d re preseed sepre d ree o ei oders o e sped rop

ssocies re eiies i ic e rop s siiic iece o coro or oi coro over e ici d operi poicies e rop crre s ieres i oe ssocie ei eo oi vere is rree i ic e rop s oi coro ere e rop s ris o e e sses o e rree rer ris o is sses d oiios or is iiiies e roup’s investments i oi veres dri e period coprised (ro Sepeer ) oreser Rods rop (R) (ic ods e esi M d oroe sses) d i Sepeer eri Rods d (ic ods e M Moor sse)

eress i e ssocie d e oi veres re ccoed or si e ei eod e re iii recoised cos ic icdes rscio coss Ssee o iii recoiio e cosoided ici sees include the Group’s share of the profit or loss and OCI of ei ccoed ivesees i e de o ic siiic iece or oi coro ceses When the Group’s cumulative share of losses in an ssocie eceeds is ivese i e sse e rop does o recoise rer osses ro is poi ivideds received ro e eiies ised ove redce e crri o o e ivese

e rop res rscios i ocoroi ieress do o res i oss o coro s rscios i ei oers o e rop ce i oersip ieres ress i dse eee e crri os o e coroi d ocoroi ieress o reec eir reive ieress i e ssidir dierece eee e o o e dse o ocoroi ieress d cosiderio

pid or received is recoised i sepre reserve ii ei For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 136 Section B: Notes to the consolidated financial statements Transurban Holdings Limited 50 for the year ended 30 June 2019 ABN 86 098 143 429

B23 Material subsidiaries

The Group’s material subsidiaries as at 30 June 2019 are outlined in the Group structure diagram below.

etio otes to the osolidated iaial statemets Trasurba oldis imited 50 or the ear eded ue TRANSURBAN TRANSURBAN TRANSURBAN HOLDINGS LIMITED HOLDING TRUST INTERNATIONAL LIMITED

T T T T T TTS TTS TTS TTS TTS

B23 Material subsidiariesCityin elourne td Cityin rust ransuran Finance ransuran ransuran td 9 press anes C Cityin Cityin rust nc The Group’s material subsidiaries as at ue are outlied i the Group struture diaram belo ransuran Finance he ills otoray td ills otoray rust ransuran NC ransuran Re 9 press anes C Company ty td ills 2 ills 2 old rust oldins C

ransuran Fundin C R ty td C R rust ransuran sset Concession 2 ty td C C oldin rust

ransuran nfrastructure ransuran CC ty td ransuran CC rust ransuran roect anaement td CC CC old Co ty td

ransuran Co ty td

ollaust td Roam ollin ty td

irport otoray td irport otoray rust 1 astern istriutor 1 astern istriutor

nterlins Roads ty imited1 otoray

oan otoray ty td oan otoray ransuran ueensland ransuran ueensland roperty rust Finance ty td ateay otoray ty td

roect artnership ST The auisitio o ourred o Clem eptember

perations ty td o eteen ride

perations ty td eacy ay

Co ty td sset rust Finance Co irportlin irportlin ty td

The auisitio o ourred o eptember

For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Trasurba oldis imited etio otes to the osolidated iaial statemets 137 or the ear eded ue

usiess ombiatios are aouted or usi the auisitio method The osideratio traserred or the auisitio o a subsidiar omprises the air alues o the assets traserred the liabilities iurred ad the euit iterests issued b the Group The osideratio traserred also iludes the air alue o a otiet osideratio arraemet ad the air alue o a preeisti euit iterest i the subsidiar uisitiorelated osts are epesed as iurred detiiable assets auired ad liabilities ad otiet liabilities assumed i a busiess ombiatio are ith limited eeptios measured iitiall at their air alues at the auisitio date a auisitiobauisitio basis the Group reoises a ootrolli iterest i the auiree either at air alue or at the ootrolli iterests proportioate share o the auirees et idetiiable assets

The eess o the osideratio traserred the amout o a ootrolli iterest i the auiree ad the auisitio date air alue o a preious euit iterest i the auiree oer the air alue o the Groups share o the et idetiiable assets auired is reorded as oodill those amouts are less tha the air alue o the et idetiiable assets o the subsidiar auired ad the measuremet o all amouts has bee reieed the dieree is reoised diretl i proit or loss as a ai o barai purhase

here settlemet o a part o ash osideratio is deerred the amouts paable i the uture are disouted to their preset alue as at the date o obtaii otrol The disout rate used is the etits iremetal borroi rate bei the rate at hih a similar borroi ould be obtaied rom a idepedet iaier uder omparable terms ad oditios

otiet osideratio is lassiied either as euit or a iaial liabilit mouts lassiied as a iaial liabilit are subseuetl remeasured to air alue ith haes i air alue reoised i proit or loss

eptember the Group ompleted the auisitio o a additioal euit iterest o the ompa that holds the otora oessio i de e outh ales ad a orrespodi additioal iterest i the otora term loa otes throuh a all ash oer o million. After this acquisition, the Group’s overall equity ownership interest in M5 otora ireased to The Group has determied that this ireased euit oership proides the Group ith otrol oer the otora

The trasatio has bee aouted or as a stepup acquisition, being a disposal of the Group’s existing 50% equity accounted investment in M5 otora at its air alue o eptember i ehae or the auisitio o a otrolli iterest i otora as i this is a busiess auisitio uri the urret iaial ear the Group iurred m o trasatio osts relati to the auisitio o the additioal interest in the M5 Motorway. These costs primarily relate to stamp duty and have been included in the Group’s osolidated statemet o omprehesie iome or the ear eded ue ad dislosed as a siiiat item see ote

The olloi table summarises ash paid o auisitio

For personal use only use personal For

Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 138 ection otes to the consolidated financial statements Transurban oldings imited for the year ended 0 une 0 A 0

The provisionally determined fair values of the assets and liabilities of M5 Motorway as at acquisition date are as follows Net assets attributable to Transurban Group’s security holders

The M5 Motorway term loan notes have been eliminated through the consolidation of the M5 Motorway. n consolidation a liability owing to the noncontrolling interest is recorded.

The assets and liabilities of the M5 Motorway were measured at fair value at the acquisition date of eptember 0 with fair values having been determined on a provisional basis. The total provisional fair value is allocated to M5 Motorway concession asset and no goodwill has been recognised.

rom the date of acquisition to 0 une 0, revenue of million and a statutory loss after taxation of 5 million was included in the profit or loss with regard to the M5 Motorway. xcluding significant items related to the acquisition, M5 Motorway contributed a net loss after taxation of million.

f the acquisition had occurred on uly 0, revenue of million, and a statutory loss after taxation of million would have been recognised for the year ended 0 une 0. xcluding significant items related to the acquisition, the net loss after taxation would have been million. These amounts have been calculated using the subsidiaries’ results and adjusting for oneoff costs not related to the ongoing operations of the business.

For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban oldings imited ection otes to the consolidated financial statements 139 for the ear ended une

n ecember the rou acuired an additional . interest in otora for a total consideration of million comrising million for the additional euit interest and million to acuire an additional . of the otora term loan notes. s there is no change in control from this transaction it has been accounted for as a transaction beteen shareholders ithin euit ith no imact to rofit or loss. Transaction costs on acuisition of the additional . interest relate to stam dut of million and are also recorded as a transaction beteen shareholders ithin euit. This transaction took the Group’s total equity interest in the otora to ..

n une the rou acuired of the entities that hold the concession in ontreal anada. air values of acuired assets and liabilities as at acuisition ere reorted on a rovisional basis in the une financial statements and have been adjusted ithin the month measurement eriod as outlined belo.

The final fair values of the assets and liabilities of as at acuisition date are as follos dustents to roisional air alue proisional air alue inal air alue – – — – — – – – – –

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 140 ection otes to the consoliate inancial stateents Transuran olins iite or the year ene une

uity accounted investments

elo is the reconciliation o the equity accounte carryin alue o inestents

– – – Acuisition – – – – – – Acuisition costs – – – – – – – – Group’s share of net profitloss – – – – Group’s recognised share of other comprehensive incomeloss – – – – – – ividends received – – – G shareholder loan modification – – – – – – – – isposal due to otoray stepup acuisition – – – – – – – – Acuisition of and capital contributions to STP JV – – – – – – – – air value adustment on issuance of shareholder loans to STP JV – – – – – – – – – –

umulative losses not recognised – – – – – –

STP JV Group’s share of losses includes stamp duty on acquisition of WCX Refer to note The Group’s share of profits from the investment in the NWRG are currently not recognised until such time as cumulative losses have been fully utilised Cumulative losses not recognised above are disclosed at 1 or the year ended 3 June 1, the Group has eliminated a gain disclosed within the NWRG summarised financial information of $4 million $4 million at relating to the sale of the Roam customer base to the Group

To facilitate the WCX acquisition, the STP JV was established by Transurban , ustralianSuper , CPP and Tawreed The STP JV and its subsidiaries is ointly controlled by Transurban, ustralianSuper and CPP

n September 1, the STP JV acquired a controlling 1 stake in WCX from the NSW State Government n the same date, Transurban also eecuted a aster Services greement with WCX to provide operational services over the concession life of WCX

WCX has longdated concessions through to and includes 33kilometres of new or improved motorway linking Sydney’s west and southwest with the C, and the corridor to Sydney irport and Port otany

To fund STP JV’s acquisition of WCX, the Group contributed $3,411 million equity into STP JV and also subscribed to shareholder loan notes SNs with a face value of $ million The SNs earn interest at a rate equivalent to the weighted average of the interest rate applicable to WCX’s senior secured debt plus a margin The agreement includes a mechanism to capitalise interest should funds not be available to settle accrued interest The SNs are repayable 1 years after their respective issuance date The SNs are presented within noncurrent financial assets at amortised cost in the consolidated balance sheet The Group has measured the SNs at fair value on initial recognition and the SNs are being subsequently measured at amortised cost using the effective interest method The difference between the nominal value of the SNs and the fair value on the date of issuance has been treated as a contribution to the equity accounted investment in STP JV

The following entities are part of the STP JV Group  STP Proect Trust  STP sset Trust  STP PT Pty td

 STP T Pty td For personal use only use personal For

The Group’s assessment that it does not control STP JV has been made by considering the terms of the Investment Agreement sig Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban oldings imited Section Notes to the consolidated financial statements 141 N 143 4 for the year ended 3 June 1

uit accounted inestents continued

G onership interest The Group has a ownership interest in NWRG, which holds 1 of the Westlink Group and the NorthConne Group Westlink holds the concession to design, construct, finance and operate the Westlink otorway in Sydney for a period of 43 years from the date of operation 1 ecember until June 4, and NorthConne holds the concession to design, construct, finance and operate the NorthConne Tunnel in Sydney until 4

The following entities are a part of the Westlink Group  WS Co Pty imited the operator of the otorway  Westlink otorway imited the nominee manager of the Westlink otorway Partnership  WS inance Pty imited the financier of the otorway  Westlink otorway Partnership was responsible for the construction of the otorway The following entities are part of the NorthConne Group  NorthConne Company Pty imited the operator of the otorway  NorthConne inance Company Pty imited the financier of the otorway  NorthConne State Works Contractor Pty imited responsible for the construction of the otorway

G sharehoder oan odification uring the period the NWRG and its shareholders modified the eisting SNs on issue The modified SNs include an at call facility maturity date is greater than 1 months The at call loan has been recorded at fair value on initial recognition and will be subsequently measured at amortised cost using the effective interest method The difference between the nominal value of the at call loan and the fair value has been treated as a contribution to the equity accounted investment in NWRG

otora onership interest as of u through to date of disposal of the Group’s equity accounted investment in M5 otora Tolls are collected on the otorway in both directions, with four toll collection points The concession for the otorway was etended to ecember following completion of the otorway widening

isposa due to otora stepup acuisition s described in note 4, the acquisition of the additional interest in the otorway in September 1 has resulted in the Group obtaining control over the M5 Motorway and this has resulted in the derecognition of the Group’s equity accounted investment in M5 Motorway at that

uedot onership interest Bluedot Innovation is an advanced location services technology company. The Group leverages Bluedot’s location services technology for the Group’s LinktGo application which allows the use of a smartphone’s GPS and other sensors to identify when a driver has entered and eited a toll road

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 142 Section B otes to the consolidated financial statements Transuran oldings Limited for the year ended une B

5 quity accounted investments continued

Set out elow is the summarised financial information for those investments accounted for using the equity method. The summarised financial information presented elow is on a per cent asis for each equity accounted investment.

— ash and cash equivalents – 5 – ther current assets – – – 5 oncurrent assets 5 – – – – 5 5 urrent liailities – 55 – 5 – oncurrent liailities – – – 5 – –

— evenue – 55 5 onstruction revenue – – – – – 5 epreciation and amortisation – – – ther epenses – 5 onstruction epenses – – – – – 5 et finance costs – – – 5 ncome ta enefitepense – 5 – 5 – – 5 – ther comprehensive incomeloss – – – – 5 –

The following tale reconciles the aove summarised financial information presented on a per cent asis to the proportional amounts recognised y the Group

roportional total comprehensive incomeloss – 5 5 – 5 mortisation of fair value uplift – – – – – – Groups share of comprehensive incomeloss – 5 5 – 55 rofits not recognised ecluding other comprehensive income – – – – – – Groups recognised share of total comprehensive incomeloss – – – – Groups share of dividendsdistriutions received – – –

. The summarised statement of comprehensive income for STP is presented aove from the date of acquisition which is Septemer . . The summarised statement of comprehensive income for M5 Motorway is presented above through 18 September 2018, the date of disposal of the Group’s equity accounted investment in M5 Motorway.

For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements ransurban oldings imited Setion otes to the onsolidated finanial statements 143 8 08 1 2 for the year ended 0 une 201

Set out belo is the summarised finanial information for eah material subsidiary see note 2 that has nonontrolling interests that are material and eternal to the Group and the total eternal nonontrolling interest he amounts dislosed are before interompany eliminations

– – – – – –

– – – – – – –

– – – – – – –

1 he summarised statement of omprehensive inome for otoray is presented above subsequent to 18 September 2018, folloing the step up aquisition of the Group’s controlling interest in otoray

ransurban oldings imited, ransurban imited, ollaust ty imited, oam olling ty imited, Sydney oads imited, Sydney oads anagement imited, Stateide oads imited, oldings o 1 ty imited, oldings ty imited and evome ty imited, ransurban unding ty imited from 1, ransurban S ty imited from 1, ransurban S ty imited from 1, ransurban S roet old o ty imited from 1 and ransurban S roet o ty imited from 1 are party to a deed of ross guarantee under hih eah ompany guarantees the debts of the others y entering into the deed, the hollyoned entities have been relieved from the requirement to prepare a finanial report and Directors’ report under Instrument 2016/785 issued by the Australian Securities and Investments Commission. The ompanies represent a losed group for the purposes of the nstrument, and as there are no other parties to the deed of ross guarantee that are controlled by THL, they also represent the 'extended closed group’.

he etended losed group adopted S inanial nstruments and S 1 evenue from ontrats ith ustomers on 1 uly 2018 he adoption of S inanial nstruments resulted in the reognition of an epeted redit loss alloane of 11 million at 1 uly 2018 he ounterparties ere assessed to have lo redit ris and the loss alloane reognised on 1 uly 2018 as therefore limited to 12 months epeted losses here ere no signifiant movements in the epeted redit loss alloane through to 0 une 201 here as no impat from the adoption of S 1 evenue from ontrats ith ustomers

Set out on the net page is the summary finanial information of the losed group

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 144 Section otes to the consolidated inancial statements Transurban Holdings Limited or the year ended 0 une 201 A 86 08 1 2

Accumulated losses of entities that joined the ‘closed group’ – — –

only use personal For

– As at 0 une 201, the Transurban Group comprises Transurban Holdings Limited, Transurban Holding Trust and Transurban International Limited, traded and uoted on the AS as one triple stapled security. nder the stapling arrangement, each entity is able to provide direct and/or indirect support to each other entity and its controlled entities ithin the Group on a continual basis. Section B: Notes to the consolidated Financial Transurbanfinancial statementsHoldings Limited for the year ended 30 June 2019 Section otes to the consolidated inancialStatements statements 145 A 86 08 1 2 or the year ended 0 une 201

As a result o the acuisition o the Legacy ay tunnel, the Group may be reuired to mae urther payments to the vendors in the event that the traic and toll revenue perormance o the relevant asset exceeds certain criteria. The contingent consideration is recorded at the end o each reporting period at its air value based upon the same traic and revenue assumptions as outlined in note 16. The olloing table details the current carrying value o the contingent consideration recognised within ‘Other provisions’ in the consolidated balance sheet, the maximum nominal value that could be paid and the date at hich the contingent consideration is assessed and becomes payable

he maximum consideration paable will relect a portion o the cumulative outperormance o the concession asset as compared against an internal rate o return agreed between ransurban ueensland and the risbane it ouncil

he parent entit does not have an contingent liabilities at reporting date nil

he euit accounted investments o the roup do not have an contingent liabilities at reporting date nil

– –

The Group’s capital commitments as of 30 June 2019 relate primarily to the Fredericksburg Extension and 395 Express Lanes in orth merica xpress anes in orth merica, ogan nhancement roect in ueensland and est ate unnel roect in elbourne

The Group’s equity accounted investment capital commitments as of 30 June 2019 primarily relate to WestConnex M5 and WestConnex in in and orthonnex in orthonnex in

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 146 ection otes to the consolidated inancial statements ransurban oldings imited or the ear ended une

On ugust the roup executed a share sale agreement or the remaining minorit interest in the compan that holds the Motorway concession, taking the Group’s ownership interest to 100%. The 34.62% minority interest, including minorit interest debt notes, will be acuired or million excluding stamp dut and transaction costs s o ugust , the completion o the transaction is subect to receiving the necessar consents

On ugust the roup announced it plans to raise $500 million via a fully underwritten ‘prorata’ institutional placement dditionall, a non underwritten ecurit urchase lan will also be in place or eligible securit holders to raise up to million nder the , eligible securit holders will be invited to subscribe or up to , o new securities per securit holder, ree o transaction and broerage costs roceeds rom the euit raisings will be used to und the acuisition o the remaining interests in the otorwa and or general corporate purposes consents or the otorwa acuisition are not obtained and the acuisition does not proceed, the proceeds will be retained or general corporate purposes

ligile institutional security holders who id in ecess of their prorata share determined y Transuran and the underwriters are epected to e allocated a minimum of their prorata share on a est endeavours asis, and any ecess may e suect to scale ack.

useuent to 30 une 201 the Group completed a numer of financing activities including

 orporate settled 350 million $50 million privately placed senior secured 15 year notes under its MT programme  5 press anes priced and settled 262 million $34 million of rivate ctivity onds maturing in 2044 and 204, to fund the construction of the redericksurg tension and  Transuran ueensland completed the refinancing of its capital ependiture orrowing facility, estalishing a new 3year $500 million facility with a maturity of ugust 2022.

For personal use only use personal For Section B: Notes to the consolidated Financial Transuranfinancial statementsoldings imited for the year ended 30 June 2019 ection otes to the consolidated financialStatements statements 147 6 0 143 42 for the year ended 30 une 201

$’000 $’000 – – – – –

evenue relates to tolling and management services provided to related parties.

nterest income relates to interest earned on heldtomaturity investments as noted elow.

et financial assets carried at amortised cost relate to orthonne and T SLN’s. The Group intends to hold the assets to maturity and to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on the principal amount outstanding. The s are not classified as an investment for euity accounting purposes, and therefore have not een affected y euity accounting losses from the associate. ll s are denominated in ustralian currency.

The orthonne s were modified during the year ended 30 une 201 and as of 30 une 201 include an interest free at call loan maturity date is greater than 12 months and a facility at a revised interest rate of 5.%. The at call loan has een recorded at fair value on initial recognition and will e suseuently measured at amortised cost using the effective interest method. The difference etween the nominal value of the at call loan and the fair value has een treated as a contriution to the euity accounted investment in G. ny unpaid interest is capitalised and deemed to suscrie for further loan notes with an aggregate principal amount eual to that unpaid interest.

The nominal value of the orthonne s at 30 une 201 is $550,15 thousand 30 une 201 $35,501 thousand.

The T s earn interest at a rate equivalent to the weighted average of the interest rate applicable to WCX’s senior secured debt plus a margin. The agreement includes a mechanism to capitalise interest should funds not e availale to settle accrued interest. The s are repayale 10 years after their respective issuance date. The s are presented within noncurrent financial assets at amortised cost in the consolidated alance sheet. The Group has measured the s at fair value on initial recognition and the s will e suseuently measured at amortised cost using the effective interest method. The difference etween the nominal value of the s and the fair value has een treated as a contriution to the euity accounted investment in T .

The nominal value of the T s at 30 une 201 is $642,05 thousand 30 une 201 il.

For personal use only use personal For pplying the epected credit loss model to these financial assets at amortised cost resulted in the recognition of a loss allowance of $3 million at 1 uly 201 previous loss allowance was $nil. The loss allowance increased y $1 million in the year ending 30 une 201 to $4 million and was impacted y the initial recognition of a loss allowance for the T s of $2 million, and decrease in the loss allowance of orthonne s of $1 million all movements were recorded through finance epenses. The Group’s debt financial assets at amortised cost are considered to have low credit risk, and the loss allowance recorded as of 1 uly 201 and 30 une 201 is therefore limited to 12 months of epected losses. Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 148 Section Notes to the consolidated financial statements Transurban oldings Limited for the ear ended une N

— No provision for doubtful debts has been raised in relation to an outstanding balances and no epense has been recognised in respect of bad or doubtful debts from related parties.

The otorwa debt notes are Transurban’s debt funding contribution to the M5 West Widening Project. The fixed maturity date of the notes in of the West Widening roect. The interest rate charged on these notes is currentl fied at ..

The SLNs earn interest at a fied rate of . until the final da of the NorthConne concession period. n unpaid interest is capitalised and deemed to subscribe for further loan notes with an aggregate principal amount equal to that unpaid interest.

The SLNs are classified as a heldtomaturit receivable. The are not classified as an investment for equit accounting purposes and therefore have not been affected b equit accounting losses from the associate. ll SLNs are denominated in ustralian currenc.

0 0 $ $ 0 0

etailed remuneration disclosures including the e management personnel are made in the remuneration report in the irectors report.

uring the ear the following fees were paid or paable for services provided b the auditor of the Group and its related practices. emuneration of auditors in the year ended 30 June 2019 was influenced by acquisitions and changes in the Group’s finance systems.

a mounts received or due and receivable b ricewaterhouseCoopers ustralia

0 0 $ $ 0 0 – 0 0

b mounts received or due and receivable b networ firms of ricewaterhouseCoopers ustralia 0 0 $ $ – 0 0 – – 0 0

only use personal For 00 0

Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban oldings imited ection otes to the consolidated financial statements 149 09 13 29 for the year ended 30 June 2019

The financial information for the parent entity Transurban oldings imited has been prepared on the same basis as the consolidated financial statements except as set out below.

nestments in subsidiaries associates and joint entures are accounted for at cost in the parent entity financial statements of Transurban oldings imited. iidends receied from associates are recognised in the parent entitys profit or loss rather than being deducted from the carrying amount of these inestments.

n addition to its own current and deferred tax amounts Transurban oldings imited also recognises the current tax liabilities or assets and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

ssets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receiable from or payable to other entities in the Group. ny difference between the amounts assumed and amounts receiable or payable under the tax funding agreement are recognised as a contribution to or distribution from wholly owned tax consolidated entities.

The indiidual financial statements for the parent entity report the following aggregate amounts

0 0 $ $ 000

000

Transurban oldings imited adopted 9 inancial nstruments and 15 eenue from ontracts with ustomers on 1 July 201. The adoption of 9 inancial nstruments resulted in the recognition of an expected credit loss allowance of million at 1 July 201. The counterparties were assessed to hae low credit ris and the loss allowance recognised on 1 July 201 was therefore limited to 12 months expected losses. There were no significant moements in the expected credit loss allowance through to 30 June 2019. There was no impact from the adoption of 15 eenue from ontracts with ustomers.

There are cross guarantees gien by Transurban oldings imited Transurban imited Tollaust Pty imited oam Tolling Pty imited ydney oads imited ydney oads Management imited tatewide oads imited M oldings o 1 Pty imited M5 oldings Pty imited and eome Pty imited as described in note 2.

For personal use only use personal For Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 150 ection otes to the consolidated financial statements Transurban oldings imited for the year ended 30 June 2019 09 13 29

This note explains the impact of the adoption of AASB 9 Financial Instruments on the Group’s financial statements. AASB 15 Reenue from ontracts with ustomers did not hae an impact on the Group’s financial statements as disclosed at note B5 Revenue.

9 replaces the proisions of 139 that relate to the recognition classification and measurement of financial assets and financial liabilities derecognition of financial instruments impairment of financial assets and hedge accounting.

9 was adopted without restating comparatie information. The reclassifications and the adjustments arising from the new standard are therefore not reflected in the restated balance sheet as at 30 June 201 but are recognised in the opening balance sheet on 1 July 201.

9 eliminates the preious 139 categories for financial assets of held to maturity loans and receiables and aailable for sale. nder 9 on initial recognition a financial asset is classified as measured at amortised cost fair alue through other comprehensie income —debt inestment —equity inestment or at fair alue through profit or loss P. The classification of financial assets under 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

9 largely retains the existing requirements in 139 for the classification and measurement of financial liabilities. The adoption of 9 has not had a significant effect on the Group’s accounting policies related to financial liabilities and derivative financial instruments.

The following table shows the adjustments recognised for each indiidual line item. ine items that were not affected by the changes hae not been included. s a result the subtotals and totals disclosed cannot be recalculated from the numbers proided.

For personal use only use personal For Section B: Notes to the consolidated Financial financial statements for the year ended 30 June 2019 Statements Transurban oldings imited Section B otes to the consolidated financial statements 151 AB 9 1 9 for the ear ended une 19

0 0 0 $ $ $ – – –

– – – –

– –

– – – —

The total impact on the Group’s equity as at 1 July 2018 is as follows:

$ 0 0

For personal use only use personal For — 0

The otorway et notes hae been eliminated subsequent to 1 July 2018, following the Group’s consolidation of this business from 18 September 2018. Refer to note 1 for further information Transurban Section B: Notes to the consolidated FY19 Corporate Report financial statements for the year ended 30 June 2019 152 Section otes to the consolidated financial statements ransurban oldings imited for the year ended 0 June 201 8 08 1 2

n 1 July 2018 the date of initial application of S , the Group has assessed which business models apply to the financial assets held by the Group and has classified its financial instruments into the appropriate S categories.

NorthConnex shareholder loan notes (‘SLNs’) (previously disclosed within noncurrent heldtomaturity assets are now classified and disclosed as financial assets at amortised cost within noncurrent assets. he Group intends to hold the assets to maturity to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on the principal amount outstanding. here was no difference between the preious carrying amount and the reised carrying amount of the financial asset at 1 July 2018 to be recognised in opening retained earnings. n increase of million in the proision for impairment of this asset was recognised in opening retaining earnings for the period ta impact 1 million.

reasury notes preiously disclosed within current heldtomaturity assets are now classified and disclosed as other financial assets at amortised cost within current assets. he Group intends to hold the assets to maturity to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on the principal amount outstanding. here was no difference between the preious carrying amount and the reised carrying amount of the financial asset at 1 July 2018 to be recognised in opening retained earnings. here was no change in the proision for impairment of these assets recognised in opening retaining earnings for the period ta impact nil.

n initial application of S , the otorway debt notes preiously disclosed as heldtomaturity assets were reclassified to financial assets at fair alue through profit or loss within noncurrent assets. he cash flows of the debt notes do not consist solely of payments of principal and interest due to a portion of cash flows being lined to the performance of the underlying toll road and as such they are required to be classified and measured at fair alue through profit or loss. n increase in alue of 22 million ta impact nil was recorded between the preious carrying amount and the reised carrying amount of the financial asset at 1 July 2018 and was recognised in opening retained earnings.

he foreign currency forwards and interest rate swaps in place as at 0 June 2018 qualified as cash flow hedges under S . The Group’s risk management strategies and hedge documentation are aligned with the requirements of S and these relationships are therefore treated as continuing hedges. Accordingly, there is no impact from adopting AASB 9 on the Group’s accounting for derivatives and hedging actiities.

The Group has three types of financial assets that are subject to AASB 9’s new expected credit loss model:

 trade receiables for toll reenue,  other financial assets at amortised cost, and  debt financial assets carried at amortised cost. he Group has reised its impairment methodology under S for each of these classes of assets. he impact of the change in impairment methodology on the Group’s retained earnings and equity is disclosed in the previous table above. While cash and cash equivalents are also subect to the impairment requirements of S , the identified epected credit loss was immaterial.

For personal use only use personal For Section C: THT & TIL financial statements Financial Transurbanfor the year olding ended Trust 30 (TT) June and 2019 Section C: TT TL financialStatements statements 153 Transurban nternational Limited (TL) for the year ended une 9

Transurban olding Trust (TT) and Section C: TT TL financial statements Transurban nternational Limited (TL) for the year ended une 9

0 0 0 0 $ $ $ $ 0 0 0 0 0 0 $– $– $ $ 0– 0– – – – – – 0– – – 0 0 0 – 0 – – 0 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

For personal use only use personal For – – – –

Transurban Section C: THT & TIL financial statements 154 SectionFY19 C Corporate: TT TL financial Report statements for theTransurban year ended olding 30 Trust June (TT) 2019 and for the year ended une 9 Transurban nternational Limited (TL)

Section C: TT TL financial statements Transurban olding Trust (TT) and for the year ended une 9 Transurban nternational Limited (TL)

0 0 0 0 $ $ $ 0 0 0 0 $ $ $ – – – – – – – 0 0– – – – – 0 0 – – – – – – – – – – – – – – – – – – – – 0 0

– – – – – – – – – – – – – – 0 – 0– – – 0 0 – – – – – – – – – – – – – 0– – – – 0

0 0

0 0 – –

– – For personal use only use personal For – – – – – – 0 0 – – The une balance sheet has been restated to reflect the final fair value of the purchase price allocation0 balances of0 A, which was acquired on une . efer to note B. The une balance sheet has been restated to reflect the final fair value of the purchase price allocation balances of A, which was acquired on une . efer to note B.

Section C: THT & TIL financial statements Financial ransuranfor the year olding ended rust 30 June and 2019 ection C financialStatements statements 155 ransuran nternational imited for the year ended une

Transurban olding Trust (TT) and Section C: TT TL financial statements Transurban nternational Limited (TL) for the year ended une 9

– – – $ $ $ $ $ – – – 0 0 0 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 0 0 0 – – – – – – – – – 0 0 – – – – – – – – – – – – – – – – – – 0 0 0 – – – – – – – – – – – – – – – – – – – – – – – 0 0 0 $ – – – $ $ $ – – – 0 0 0 0 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 0 – – – – – – – – – – – For personal use only use personal For – – – – – – – – – . efer to the Group’s Consolidated statement of changes in equity for further information. – – – – – – 0 0 0

. efer to the Group’s Consolidated statement of changes in equity for further information.

Transurban Section C: THT & TIL financial statements ection C financial statements ransuran olding rust and 156 ectionFY19 C Corporate financial Report statements for theransuran year ended olding 30 rust June 2019 and for the year ended une ransuran nternational imited for the year ended une ransuran nternational imited

– – – – – – – – –

– – – – – – – – – – – – – – – –

– – – –

– –

– – – – – –

only use personal For – – – – – – –

Section C: THT & TIL financial statements Financial ransuranfor the year olding ended rust 30 June and 2019 ection C financialStatements statements 157 ransuran nternational imited for the year ended une

ransuran olding rust and ection C financial statements ransuran nternational imited for the year ended une

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – otal der iaties alance at une is a liaility of million. he difference in carrying alue to the tale aoe relates to interest rate sap contracts forard echange contracts the interest portion of crosscurrency interest rate sap contracts and credit aluation and deit aluation adustments hich are ecluded from theotal alances deriaties aoe. alance at une is a liaility of million. he difference in carrying alue to the tale aoe relates to interest rate sap contracts forard echange contracts the interest portion of crosscurrency interest rate sap contracts and credit aluation and deit aluation adustments hich are ecluded from

the alances aoe. – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

For personal use only use personal For otal deriaties alance at une is a liaility of million. he difference in carrying alue to the tale aoe relates to interest rate sap contracts forard echange contracts the interest portion of crosscurrency interest rate sap contracts and credit aluation and deit aluation adustments hich are ecluded from theotal alances deriaties aoe. alance at une is a liaility of million. he difference in carrying alue to the tale aoe relates to interest rate sap contracts forard echange contracts the interest portion of crosscurrency interest rate sap contracts and credit aluation and deit aluation adustments hich are ecluded from

the alances aoe.

Transurban Section C: THT & TIL financial statements FY19 Corporate Report for the year ended 30 June 2019 158 ection C financial statements ransuran olding rust and for the year ended une ransuran nternational imited

– – – – – – – – – – – – – – – – – –

– – – – – – – – – – – – – – – –

For personal use only use personal For

Section D: Notes to THT & TIL financial Financial ransuranstatements olding for therust year endedand 30 June 2019 ection otes to financialStatements statements 159 ransuran nternational imited for the year ended une

For personal use only use personal For Transurban Section D: Notes to THT & TIL financial 160 ectionFY19 Corporate otes to Report financial statements statements for theransuran year ended olding 30 rust June 2019 and for the year ended une ransuran nternational imited

The Transurban Holding Trust Group consists of Transurban Holding Trust and the entities it controls (‘THT’) and the Transurban nternational Limited Group consists of Transurban International Limited and the entities it controls (‘TIL’). THT and TIL form part of the stapled ransuran Group.

is registered as a managed inestment scheme under Chapter C of the Corporations ct and as a result requires a responsile entity. he responsile entity of the is ransuran nfrastructure anagement Limited (‘TIML’). TIML is the responsible entity of the Trust and is responsile for performing all functions that are required under the Corporations ct of a responsile entity.

is a rust registered and domiciled in ustralia.

is a pulic company limited y shares and incorporated in ustralia.

THT’s current liabilities exceed its current assets y million as at une . his is in part attriutale to million of loans payale to another entity ithin the ransuran Group. cluding this loan the Group has net current assets of million. he financial report has een prepared on a going concern asis hich assumes the continuity of normal operations. his is ased on the folloing

 has generated positie cash inflos from operating actiities of million for the year ended une  epects to refinance or repay ith aailale cash all orroing facilities classified as a current liaility at une  has paid million of dividends and distributions to Transurban Group’s security holders oer the past months. ayment of future diidends is at the discretion of the oard and

TIL’s current liabilities exceed its current assets by million as at une . his is primarily attriutale to million of loans payale to another entity ithin the ransuran Group. cluding this loan the Group has net current assets of million. he financial report has een prepared on a going concern asis hich assumes the continuity of normal operations.

nder the stapling arrangement each entity is ale to proide direct andor indirect support to each other entity and its controlled entities ithin the ransuran Group.

he ransuran olding rust as estalished on oemer and has no termination date. he rust as registered as a managed inestment scheme y the ustralian ecurities and nestments Commission on oemer .

For personal use only use personal For Section D: Notes to THT & TIL financial Financial Transurbanstatements Holding for theTrust year (THT) endedand 30 June 2019 ection otes to THT TIL financialStatements statements 161 Transurban International Limited (TIL) for the year ended une

efer to note for further information around the structure of the segments for the Transurban Group.

Management has determined that THT has one operating segment.

THT operations involve the leasing of assets and the provision of funding to the Transurban Group or associates of the Transurban Group. ll revenues and expenses are directly attributable to these activities. The management structure and internal reporting of the Trust are based on this one operating segment.

Management has determined that TIL has one operating segment.

TIL operations involve the development operation and maintenance of toll roads in orth merica. ll revenues and expenses are directly attributable to these activities. The management structure and internal reporting of TIL are based on this one operating segment.

egment information for TIL as disclosed in the Transurban Group segment note at is reconciled to the TIL statutory financial information belo.

evenue from external customers is through toll and service and fee revenues earned on toll roads. There are no intersegment revenues ithin the orth merica segment. egment revenue reconciles to total statutory revenue as follos

roportional IT reconciles to statutory net profit as follos

– –

For personal use only use personal For Transurban Section D: Notes to THT & TIL financial 162 ectionFY19 Corporate otes to THT Report TIL financial statements statements for theTransurban year ended Holding 30 Trust June (THT) 2019 and for the year ended une Transurban International Limited (TIL)

– – – – – – – –

or accounting policies on Toll revenue construction revenue and other revenue refer to note .

does not apply to the rental income revenue stream hich comprises rental income on the property held by THT. This income is recognised in accordance ith the terms of the lease contract.

(‘CityLink’) (a member of the Transurban Group), is required to pay annual concession

– – – – – – –

– – – – – – – – – – only use personal For

Section D: Notes to THT & TIL financial Financial Transurbanstatements Holding for theTrust year (THT) endedand 30 June 2019 ection otes to THT TIL financialStatements statements 163 Transurban International Limited (TIL) for the year ended une

istributions

efer to note of the THL financial statements for the dividendsdistributions paid and payable by the Group.

dditional proision reconised , , mounts paid () () (,) mounts reinested () – () dditional proision reconised , , mounts paid (,) () (,) mounts reinested () – ()

arnins per stapled security

rofit(loss) attributable to ordinary security holders () () ()

eihted aerae number of securities () , , , ,

asic and diluted earnins per security attributable to the ordinary security holders (Cents) () ()

For personal use only use personal For Transurban Section D: Notes to THT & TIL financial 164 ectionFY19 Corporate otes to THT Report TIL financial statements statements for theTransurban year ended Holding 30 Trust June (THT) 2019 and for the year ended une Transurban International Limited (TIL)

efer to note for a description of the nature and purpose of each reserve.

— – – — – – – –

– – — – – – – – – – – – — – – – – – – – –

– – – – – – – – – – – – –

— – — – – — – –

only use personal For – – –

Section D: Notes to THT & TIL financial Financial Transurbanstatements Holding for theTrust year (THT) endedand 30 June 2019 ection otes to THT TIL financialStatements statements 165 Transurban International Limited (TIL) for the year ended une

emeasurement of concession notes represents the discount uninding over the passage of time on these notes and the change in the payment profile of the concession notes.

efer to note for a description of each facility type. – – –

The instruments used by the Group are described in note .

— – – – – – – – — – – – – – – – – – – – – — – – – — – – – – – – – – –

The effects of the foreign currency related hedging instruments on THT’s and TIL’s financial position and performance are as follos

— – – – – –

For personal use only use personal For – – – – –

Transurban Section D: Notes to THT & TIL financial FY19 Corporate Report statements for the year ended 30 June 2019 166 etion otes to THT TIL inania statements Transuran Hoding Trust THT and or the ear ended une Transuran Internationa Limited TIL

aturit roie—notiona aue o rossurren interest rate sas

– – – – – – – – – –

—ot aiae

– –

– – – – – – – – – – – – – – – – – – – – – – – – – – –

– – – –

only use personal For – – – – – –

Section D: Notes to THT & TIL financial Financial statements for the year ended 30 June 2019 Statements 167

’s and TIL’s

asd n aa d a ns a sa nas ds n nd an ans a a aa n dd d nsn – – – –

— aa

nss dn anss dsnad – –

TT and TIL a n aa ad ns n ns as s a n da ad n aa a ns and ns a sa nas sandn

For personal use only use personal For ns ns a ns asd n aa a ans s as s

– Transurban Section D: Notes to THT & TIL financial FY19 Corporate Report statements for the year ended 30 June 2019 168

contractual undiscounted cash flows of the Group’s financial liabilities. For interest rate swaps, the cash

– – – – – – – – – –

– – – – – – – – – – – – – – – –

– – – – – – – – –

– – – – – – – – –

For personal use only use personal For Section D: Notes to THT & TIL financial Financial ransurbanstatements oldin for therust year endedand 30 June 2019 ection otes to financialStatements stateents 169 ransurban nternational iited for the ear ended une

efer to the oncession suar section of the Group financial stateents for the intanible assets, concession note and proissor note accountin policies.

– –

– –

– – – – – – – – – – – – – – – – – – – – –

TIL’s financial assets relate onl to as of une and une . efer to ote for a reconciliation of oeents in the oncession financial asset.

he face alue of proissor notes on issue at une is illion illion. he net present alue at une of the redeption paents relatin to these proissor notes is illion illion.

For personal use only use personal For he face alue of proissor notes on issue at une is illion illion. he net present alue at une of the redeption paents relatin to these proissor notes is illion illion.

he noinal alue of paables to relatin to the Fredericsbur tension at une is illion il. s at une , a current liabilit of illion and a noncurrent liabilit of illion has been recorded. Transurban Section D: Notes to THT & TIL financial 170 cinFY19 Corporate s TT Report TIL financial sans statements for theTansan year ended lin 30 Ts June TT 2019 an f a n n Tansan Innainal Lii TIL

uit accounted investments

Set out below is the summarised financial information for the THT Group’s investments accounted for using the equity method. T sais financial infain sn l is n a cn asis f n f ails f T an

— urrent assets – oncurrent assets – – urrent iaiities – – oncurrent iaiities – – –

— evenue – onstruction revenue – – – – – – onstruction costs – – – – – – epreciation and amortisation – – – ther epenses – et finance cost – – – ncome ta epense – – – – – ther comprehensive incomeoss – – – –

T fllin al cncils a sais financial infain sn n a cn asis inal ans cnis

nership interest roportiona tota comprehensive incomeoss – – rofits not recognised – – – – – – Groups share of comprehensive incomeoss – –

The summarised statement of comprehensive income for ST is presented above from the date of acquisition which is September .

Set out below is the reconciliation of the summarised financial information presented to the carrying amount of the Group’s interest in associates.

– – – – – – – – Group’s share of net profit – – – – – – – – – – – – – – Group’s recognised share of other comprehensive income – – –

only use personal For – – – –

Section D: Notes to THT & TIL financial Financial statements for the year ended 30 June 2019 Statements Transurban Holding Trust THT and Section otes to THT T financial statements 171 Transurban nternational imited T for the year ended une

Set out below is summarised financial information for each material subsidiary that has noncontrolling interests that are material to THT. The amounts disclosed for each subsidiary are before intercompany eliminations.

– – – –

For personal use only use personal For Transurban Section D: Notes to THT & TIL financial 172 SectionFY19 Corporate otes to THT Report T financial statements statements for theTransurban year ended Holding 30 Trust June THT 2019 and for the year ended une Transurban nternational imited T

$’000 $’000 $’000 $’000 – – – – – – – – – – – – –

– – – – – – – – – – – – – – –

pplying the epected credit loss model to THT’s receivables resulted in the recognition of a loss allowance of million at uly previous loss allowance was nil. There were no significant movements in the epected credit loss allowance through to une . THT’s financial assets at amortised costs are considered to have low credit ris and the loss allowance recorded as of uly and une is therefore limited to months of epected losses.

$’000 $’000

Transactions an otstanin balances beteen THTT an TH.

For personal use only use personal For

Section D: Notes to THT & TIL financial Financial statements for the year ended 30 June 2019 Statements Transrban Holin Trst THT an ection otes to THT T financial stateents 173 Transrban nternational iite T for te ear ene ne

Te inivial financial stateents for te arent entities THT an T so te folloin areate aonts

0 0 0 0 $ $ $ $

Shareholders’ equity

– – –

Te arent entities aote inancial nstrents an evene fro ontracts it stoers on l . Te aotion of inancial nstrents reslte in te reconition of an eecte creit loss alloance of illion for THT an il for T at l . Te conterarties ere assesse to ave lo creit ris an te loss alloance reconise on l as terefore liite to onts eecte losses. rin te erio tere as a rection in te eecte creit loss alloance of illion e to a corresonin ecrease in te receivable balances. Tere as no iact on eiter arent entit fro te aotion of evene fro ontracts it stoers.

Tis note elains the impact of the adoption of AASB 9 Financial Instruments on the Group’s financial statements. AASB 15 Revenue from ontracts it stoers i not ave an iact on THT and TIL’s financial stateents as isclose at note evene.

Te folloin table sos te astents reconise for eac inivial line ite. ine ites tat ere not affecte b te canes ave not

been incle. s a reslt te sbtotals an totals isclose cannot be recalclate fro te nbers rovie. For personal use only use personal For Transurban Section D: Notes to THT & TIL financial FY19 Corporate Report statements for the year ended 30 June 2019 174 Section otes to THT TIL financial statements Transuran Holdin Trust THT and for the ear ended une 19 Transuran International Limited TIL

haes i aouti oliies otiued

As eplained elo AASB 9 as adopted ithout restatin comparative information. The reclassifications and the adustments arisin from the ne impairment rules are therefore not reflected in the alance sheet as at une 1 ut are instead reconised in the openin alance sheet on 1 ul 1.

0 0 0 0 0 0 $ $ $ $ oas to related arties – – – rade ad other reeiales – – oessio otes – – – – eldtoaturity iestets – – – – iaial assets at aortised ost – – – – –

eriatie iaial istruets – – – elated arty reeiales – – – oessio otes – – – – oessio iaial asset – – – – eerred ta assets – – –

0 –

eriatie iaial istruets – – – – – – – –

– eerred ta liailities – – – – eriatie iaial istruets – – – –

– –

otriuted equity – – – – ssued uits – – – – eseres – – uulated losses – ootrolli iterests – – – – 0 –

— For personal use only use personal For Refer to otes B B15 B and B for a summar of accountin policies adopted upon transition to AASB 9.

airet o iaial assets The roup as reuired to revise its impairment methodolo under AASB 9 for each class of financial assets measured at amortised cost there are no financial assets measured at fair value throuh other comprehensive income. Section D: Notes to THT & TIL financial Financial statements for the year ended 30 June 2019 Statements Transuran Holdin Trust THT and Section otes to THT TIL financial statements 175 Transuran International Limited TIL for the ear ended une 19

Applin the epected credit loss model resulted in the reconition of a loss alloance of 1 million on 1 ul 1 previous loss alloance as nil. The Group’s related party receivables at amortised cost are considered to have low credit risk, and the loss allowance recognised on 1 ul 1 as therefore limited to 1 months epected losses.

For personal use only use personal For Transurban Section E: Directors’ declaration for 176 ectionFY19 E: Corporate Directors’ declaration Report theransurban year ended olding 30 rust June 2019 and or the year ended une ransurban nternational imited

n the opinion o the irectors o ransurban oldings imited, ransurban nrastructure anagement imited as the responsible entity o Transurban Holding Trust) and Transurban International Limited (collectively referred to as ‘the Directors’):

a the inancial statements and notes o ransurban oldings imited and its controlled entities, including ransurban olding rust and its controlled entities and ransurban nternational imited and its controlled entities set out on pages to are in accordance with the orporations ct , including

i complying with ccounting tandards, the orporations egulations and other mandatory proessional reporting reuirements, and

ii giving a true and fair view of the Transurban Holdings Limited Group's, Transurban Holding Trust Group’s and Transurban International Limited Group’s financial position as at 30 June 201 and o its perormance or the year ended on that date, and

b there are reasonable grounds to believe that the ransurban oldings imited Group, ransurban olding rust Group and ransurban nternational imited Group will be able to pay their debts as and when they become due and payable, and

c at the date o this declaration, there are reasonable grounds to believe that the members o the tended losed Group identiied in note will be able to meet any obligations or liabilities to which they are, or may become liable, subect by virtue o the deed o cross guarantee described in note

ote conirms that the inancial statements also comply with nternational inancial eporting tandards as issued by the nternational ccounting tandards oard

he irectors have been given the declarations by the hie ecutive icer and hie inancial icer reuired by section o the orporations ct

irector

irector

elbourne ugust

For personal use only use personal For Financial Statements 177

Independent auditor’s report To the stapled security holders of Transurban Holdings Limited, Transurban Holding Trust and Transurban International Limited

Report on the audit of the financial report

Our opinion In our opinion: The accompanying financial reports of Transurban Holdings Limited (THL or the Company) and its controlled entities (together the Transurban Group or the Group), Transurban Holding Trust (the Trust) and its controlled entities (together THT) and Transurban International Limited (the International Company) and its controlled entities (together TIL) are in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of the Transurban Group, THT and TIL’s financial positions as at 30 June 2019 and of their financial performance for the year then ended (b) complying with Australian Accounting Standards and the Corporations Regulations 2001.

What we have audited The Transurban Group, THT and TIL financial reports (the financial report) comprise: • the consolidated balance sheets as at 30 June 2019 • the consolidated statements of comprehensive income for the year then ended • the consolidated statements of changes in equity for the year then ended • the consolidated statements of cash flows for the year then ended • the notes to the consolidated financial statements, which include a summary of significant accounting policies • the directors' declaration.

Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence We are independent of the Transurban Group, THT and TIL in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also

For personal use only use personal For fulfilled our other ethical responsibilities in accordance with the Code.

PricewaterhouseCoopers, ABN 52 780 433 757 2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Transurban 178 FY19 Corporate Report

Our audit approach An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Transurban Group, THL and TIL, their accounting processes and controls and the industry in which they operate.

Materiality • For the purpose of our audit we used overall Group materiality of $50 million, which represents approximately 2.5% of the Group's earnings before interest, tax, depreciation and amortisation expenses (EBITDA). • We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole. • We chose EBITDA as the benchmark because, in our view, it is the metric against which the performance of the Transurban Group is most commonly measured and is a generally accepted benchmark in the infrastructure industry. We chose 2.5% based on our professional judgement, noting that it is within the common range relative to EBITDA benchmarks.

Audit Scope • Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events. • We conducted an audit of the financial report for each of the Transurban Group, THT and TIL, including substantive audit procedures in respect of the operation of each of the toll road concessions and equity accounted investments. Specific audit procedures were also performed for interest, tax, depreciation and amortisation expenses.

Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. The key audit matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context. We communicated the key audit matters to the Audit and Risk Committee.

For personal use only use personal For

Financial Statements 179

Recording of toll revenue

Group – Note B5 THT TIL – Note D4 Toll revenue: $2,643m Toll revenue – not applicable Toll Revenue: $312m How our audit addressed the key Key audit matter audit matter The Transurban Group operates toll roads in 4 geographic Our procedures included, amongst others: segments: Melbourne, Sydney and Brisbane in Australia and • North America. Each toll road records and recognises revenue Testing a selection of Information through the use of technology, specifically, road side equipment Technology General Controls (ITGCs) supported by tolling and billing systems. supporting the integrity of the tolling systems' operation, including access, Tolling equipment and systems are customised complex systems operations and change management that are built with the purpose of correctly identifying vehicle type, controls. calculating correct fare and linking the vehicle to the customer’s • Performing tests of the design and account for billing purposes or obtaining information from local operation of relevant controls over transport authorities for vehicles that have not made a valid billing revenue adjustments, write offs, image arrangement. processing and exception reporting. Every toll road operates under a different concession deed which • Performing testing of the review and governs the means by which customers are charged. approval of a selection of toll price In May 2018 the Group acquired the A25 concession in Montreal increases for each toll road during the (North America). This is the first financial year in which A25 year. revenue is included for the full 12 month period. The M5 • Performing data analysis of manual Concession (Interlink Roads) was consolidated in September journals and adjustments to revenue 2018. to test a sample of material postings to revenue and checking that they were As of 1 July 2018 the Group adopted a new revenue accounting generated by the tolling systems. policy due to the mandatory introduction of AASB 15 – Revenue from Contracts with Customers. The new policy is disclosed in • Using data analytics to recalculate the Note B5. toll revenue for each toll road in Australia for the full 12 month period. We considered this to be a key audit matter for the Group and TIL • Testing a selection of cash collected due to the large volume of transactions that were processed in the by the North America toll roads. year, the unique nature of each toll road and the reliance on bespoke information technology systems and controls. • Using data analytics to supplement our testing of revenue transactions on the A25 toll road. • For a sample of contracts, developing an understanding of the key terms of the arrangements, term dates, performance obligations and payments made in regard to AASB 15. • Assessing the Group's identification of performance obligations and allocation of prices to the performance obligations for a sample of contracts. • Evaluating the appropriateness of the disclosures for AASB 15 made in Note B5 in light of the requirements of Australian Accounting Standards.

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Transurban 180 FY19 Corporate Report

Borrowings

Group – Note B14 THT – D10 TIL – D10 Current borrowings: $959m Current borrowings: $648m Current borrowings: $4m Non-Current borrowings: $17,507m Non-Current borrowings: $6,426m Non-Current borrowings: $2,959m How our audit addressed the key Key audit matter audit matter Borrowings are an integral part of the Transurban Group’s Our procedures included, amongst others: business model as it is the key source of funds used by the • business to fund new projects and upgrades to existing Obtaining confirmations from banks to concession assets. Borrowings represent the largest liability on confirm a selection of borrowings. the balance sheets. • Reading the most up-to-date borrowing agreements with the During the year the Transurban Group refinanced around $3 financiers to develop an billion of borrowings through bond issuances, private placements understanding of the terms associated and new bank facilities. with the facilities and the amount of Each of the borrowing agreements has its own set of terms facility available for drawdown. and conditions and therefore audit work was required to assess • Where debt is regarded as non- the treatment of the agreements and their impact on the current, considering the Group's financial statements. assessment whether there is an We considered this to be a key audit matter for the Group, THT unconditional right to defer payment and TIL given the size of the borrowings balance, the number of such that there were no repayments borrowing agreements in place and the importance of the funding required within 12 months from the structure for continued growth. balance date. • Assessing accounting treatment of the capitalised borrowing costs arising from new arrangements and borrowing costs related to terminated facilities. • Evaluating the debt maturity profile and funding plan in light of our understanding of the debt agreements in place. • Performing tests of the design and operation of relevant controls over treasury function including funding plan and board review and approval of debt agreements and financial institutions used.

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Financial Statements 181

Service concession arrangements

Group – Notes B17 – B21, B28 THT – Notes D12, D14 TIL – Note D12 – D14 Concession assets: $21,392m Concession assets: $9,052m Concession assets: $4,045m Assets under construction: $5,112m Assets under construction: $818m Assets under construction: $860m Concession financial assets: $369m Concession notes receivable: $1,029m Concession financial asset: $341m Maintenance provision: $1,162m Construction obligation: $342m Maintenance provision: $159m Construction obligation: $2,222m Other liabilities: $107m Other liabilities: $363m Other liabilities: $470m Other provisions: $122m How our audit addressed the key Key audit matter audit matter Each of the concession assets in the Transurban Group’s portfolio We evaluated the concession agreements represents a contractual right under a concessional agreement to toll a for each toll road to develop an road in return for the capital and expertise needed to build, maintain understanding of the nature of the and operate the road. agreements with the concession grantors Every concession asset is governed by its own concession agreement and assess the accounting implications of between the Group and the concession grantor (typically government or the contractual arrangements. a local transport authority of the region in which concession is granted). Our other procedures included, amongst As a result, the Transurban Group is subject to a number of contractual others: obligations, some of which have a direct impact on the financial • Performing tests of the design and statements. Whenever the Group undertakes a new project to operation of controls over a selection construct, acquire or upgrade the asset, its contractual arrangements of the forecast and modelling with concession grantors are altered either through a new concession processes impacting the models. agreement or an amendment of the existing concessional agreement. • Considering the relevant obligations in The right to receive future economic benefits is recognised on the the concession agreements having balance sheet as a concession asset. The asset is recognised at cost of regard to the calculations in the construction or price paid at acquisition. The Group monitors models and corresponding balance performance of the assets for indicators of impairment at the end of sheet line items. each reporting period. Where indicators are identified during the period, the Group compares the carrying amount to its estimate of the • Involving valuation specialists to recoverable amount of the asset. assess the calculation methodology and reasonableness of the key The concession agreements also contain clauses that require the assumptions used within the models. Transurban Group to make cash outflows in the future, resulting in the recognition of concession liabilities such as maintenance liabilities, • Evaluating the impairment indicator concession note liabilities and contingent consideration liabilities. assessment. The concession asset recoverable amount and concession liabilities • Assessing the mathematical accuracy recognised are calculated by estimating the net present value of future of the models and agreeing key data cash flows of the concession agreements using discounted cash flow to the latest approved budgets and models (the models). This area requires significant judgement by the forecasts. Group due to a number of uncertain assumptions that impact the timing • Assessing the adequacy of the and quantum of future cash flows generated by the toll road, specifically disclosures in the financial report in assumptions such as future traffic expectations, operating costs, respect of contractual arrangements maintenance cash outflows and finance cost forecasts. having regard to the requirements of In April 2019 the Victorian Parliament approved the CityLink Concession Australian Accounting Standards. Deed Amendments for the West Gate Tunnel Project. Additionally, in April 2019 the Group reached commercial close in relation to the Fredericksburg Extension in North America. We considered this to be a key audit matter for the Group, THT and TIL due to the accounting complexity of the arrangements and judgement required to interpret the accounting requirements and calculate their For personal use only use personal For impact on the financial statements.

Transurban 182 FY19 Corporate Report

Income taxes

Group – Note B7 THT TIL – Note D5 Income tax benefit: $140m Income tax benefit: $35m Deferred tax assets: $1,107m Income taxes – not applicable Deferred tax assets: $250m Deferred tax liabilities: $1,412m Deferred tax liabilities: $357m How our audit addressed the key Key audit matter audit matter The Transurban Group is subject to income taxes in Australia Our procedures included, amongst others: and North America. Judgement is required in determining the • provision for income taxes, specifically those industry specific Assessing the processes for tax rules and provisions which require significant judgement identifying uncertain tax positions and detailed understanding of the legislation and relevant case and the related accounting policy of law. provisioning for tax exposures. • Using tax specialists to gain an Some of the tax provisions are subject to interpretation and understanding of the current status therefore for some transactions the ultimate tax determination of tax assessments and is uncertain. investigations and assessing the Deferred tax assets relating to carried forward tax losses are impact of selected new tax laws and recognised to the extent there are sufficient taxable temporary guidance on the tax balances differences relating to the same taxation authority against recognised. which the unused tax losses can be utilised. The assumptions • Reading recent rulings and supporting this position are dependent on future cash flows correspondence with local tax generated from the toll roads operating in each tax group. authorities, as well as external Future taxable profits will need to be generated in order to advice provided to the Group and support the recognition of the deferred tax assets. TIL where relevant, to assess the Due to the stapled structure of the Group, tax calculations are associated tax provisions. complex and require the Group to make judgements and • Testing a sample of deferred and assumptions. Furthermore, as described in Note B7 the income tax calculations for each tax Transurban Group consists of six different tax consolidated group. groups with their own Tax Sharing and Tax Funding • Assessing the key assumptions used agreements, each of which creates additional complexities in to support the recognition of tax the calculations. losses and their future utilisation. We considered this to be a key audit matter for the Group and The key assumptions included TIL due to the accounting complexity of the calculations, judgements over future traffic growth judgmental nature and expertise required to estimate the tax and pricing assumptions. positions recorded.

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Financial Statements 183

Recoverability of equity accounted investments – Sydney Transport Partners Group (STP)

Group – Note B25 THT – Note D15 TIL Equity accounted investment: $3,115m Equity accounted investment: $2,274m Equity accounted investment – not applicable How our audit addressed the key Key audit matter audit matter In September 2018 the Sydney Transport Partners Group (STP) Our procedures included, amongst others: acquired a stake (51%) in the WestConnex Project. The • Transurban Group hold a 50% share in the STP joint venture and Performing tests of the design and equity account for its investment. operation of controls over a selection of the forecast and modelling The Group makes certain assumptions in assessing impairment processes impacting the impairment for its investment. These include assumptions around expected assessment. traffic flows, forecast operational costs, construction completion • Evaluating the impairment indicator timing and budget construction costs. assessment considering the We considered this to be a key audit matter for the Group and requirements under the Australian THT, due to the size of the investment and the complexity and Accounting Standards. judgement involved in the impairment assessment. • Involving valuation specialists to assess the reasonableness of key assumptions used within the impairment indicator assessment.

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Transurban 184 FY19 Corporate Report

Other information The directors of Transurban Holdings Limited, Transurban Infrastructure Management Limited (as the responsible entity of Transurban Holding Trust) and Transurban International Limited (collectively referred to as “the directors”) are responsible for the other information. The other information comprises the information included in the Group’s Corporate Report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon. Prior to the date of this auditor’s report, the other information we obtained included the Corporate Report, FY19 Results Presentation, FY19 Sustainability Data and Climate Change Disclosures, FY19 UN Sustainable Development Goals Progress Report, Corporate Governance Statement and Security Holder Information. We expect the remaining other information to be made available to us after the date of this auditor’s report.

Our opinion on the financial report does not cover the other information and we do not and will not express an opinion or any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information above and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the other information not yet received, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and use our professional judgement to determine the appropriate action to take.

Responsibilities of the directors for the financial report The directors are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Transurban Group, THT and TIL to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Transurban Group, THT or TIL or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic

For personal use only use personal For decisions of users taken on the basis of the financial report.

Financial Statements 185

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor's report.

Report on the remuneration report

Our opinion on the remuneration report We have audited the remuneration report included in pages 64 to 85 of the Directors’ Report for the year ended 30 June 2019.

In our opinion, the remuneration report of Transurban Holdings Limited for the year ended 30 June 2019 complies with section 300A of the Corporations Act 2001.

Responsibilities The directors are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

PricewaterhouseCoopers

Marcus Laithwaite Melbourne Partner 7 August 2019

For personal use only use personal For

Transurban FY19 Corporate Report

Security holder information

The security holder information set out below was applicable as at 5 July 2019.

Distribution of stapled securities

The number of holders of stapled securities, which comprise one share in Transurban Holdings Limited, one share in Transurban International Limited and one unit in Transurban Holding Trust, was 117,707. The voting rights are one vote per stapled security. The percentage of total holdings held by or on behalf of the 20 largest holders of these securities was 79.69 per cent.

The distribution of holders was as follows:

Security grouping Total holders Stapled securities Percentage of issued stapled securities 1–1,000 42,187 18,340,187 0.68 1,001–5,000 53,266 130,960,379 4.90 5,001–10,000 13,195 92,393,566 3.45 10,001–100,000 8,764 185,633,757 6.94 100,001 over 295 2,247,970,456 84.03 Total 117,707 2,675,298,345 100.00

There were 2,425 holders of less than a marketable parcel of stapled securities. There were 2,675,298,345 stapled securities on issue.

Twenty largest holders of stapled securities

Name Number of stapled Percentage of issued securities held stapled securities HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 928,970,599 34.72 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 463,271,244 17.32 BNP PARIBAS NOMINEES PTY LTD 345,399,379 12.91 CITICORP NOMINEES PTY LIMITED 166,626,834 6.23 NATIONAL NOMINEES LIMITED 90,189,092 3.37 BNP PARIBAS NOMS PTY LTD 20,120,901 0.75 AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED 19,821,908 0.74 CITICORP NOMINEES PTY LIMITED 13,394,838 0.50 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 11,460,774 0.43 CUSTODIAL SERVICES LIMITED 10,814,455 0.40 NATIONAL NOMINEES LIMITED 8,944,380 0.33 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED—GSCO ECA 8,773,777 0.33 ARGO INVESTMENTS LIMITED 8,123,736 0.30 AMP LIFE LIMITED 7,567,247 0.28 NETWEALTH INVESTMENTS LIMITED 6,934,724 0.26 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 5,749,244 0.21 MILTON CORPORATION LIMITED 4,592,153 0.17 AUSTRALIAN EXECUTOR TRUSTEES LIMITED 3,932,763 0.15 BKI INVESTMENT COMPANY LIMITED 3,697,584 0.14 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED—A/C 2 3,550,691 0.13

Total 2,131,936,323 79.69 For personal use only use personal For

Substantial holders

Substantial security holders as at 5 July 2019 were as follows:

Name Number of stapled Percentage of issued securities held stapled securities UNISUPER 333,423,165 12.48 BLACKROCK GROUP 130,922,279 6.01 THE VANGUARD GROUP 111,240,857 5.00 Key contacts and advisers

Registered office

Level 31, Tower 5, Collins Square 727 Collins Street Docklands VIC Australia 3008

Phone: +61 3 8656 8900

Share registry

Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford VIC Australia 3067

Mailing address: GPO Box 2975 Melbourne VIC Australia 3001

Phone: 1300 360 146

Outside Australia: +61 3 9415 4315

Email: computershare.com.au

Investor Relations Team

Email: [email protected]

General enquiries

Email: [email protected]

Auditors

PricewaterhouseCoopers 2 Riverside Quay Southbank VIC Australia 3006

Mailing address: GPO Box 1331 Melbourne VIC Australia 3001

Phone: +61 3 8603 1000

Whistleblower service

Website: kpmgfaircall.kpmg.com.au/Transurban

Phone (toll free): 1800 500 965 (Australia)

For personal use only use personal For 1866 8849 435 (Greater Washington Area) 1800 241 9148 (Montreal—operated in English and French)

Mailing address: The FairCall Manager, KPMG Forensic PO Box H67, Australia Square Sydney NSW Australia 1213 For personal use only use personal For

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