Transurban Group

Thank you for standing by and welcome to the Transurban Group FY24 results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Miss Tareen Chua, Senior Manager, Investor Relations. Please go ahead.

Thanks, Mel. Good morning, everyone, and thank you for joining us at Transurban's 2024 full year results briefing. Transurban acknowledges the traditional owners of the lands throughout Australia, and we pay respect to Elders past and present. We acknowledge our roads and infrastructure are built on country. With deep respect, we incorporate the voices of First Nations peoples in our approach, supporting equitable access to mobility across communities. We're joined today by our CEO, Michelle Jabco, and CFO, Henry Byrne, and together they'll take you through the presentation that we lodged with the ASX this morning. Today's presentation should take about 30 minutes and then we'll have plenty of time for questions. I'll now hand over to Michelle to get us started.

Thanks, Tareen, and good morning to everyone on the call. I'm really pleased with the way in which we've delivered this set of results today. We've delivered strong free cash generation, driving distribution growth of 7%. Revenue is up almost 7% and traffic has grown in each market. Importantly, we've been very disciplined on costs, outperforming our guidance and improving margins. And alongside the result itself, I really feel we're seeing evidence of our strategy coming together. We've announced a new major road upgrade for the Logan Motorway in Queensland. We're engaging constructively on toll reform in New South Wales alongside the government and our investment partners. And we have a renewed customer focus that is translating to improved NPS and setting the foundations for our future growth. But if I take a step back, this has also been a year of change for our organisation. We've been evolving and also making sure we keep momentum to continue delivering for our investors. If I summarise what we spoke about in May at our Investor Day, our strategy is really focused on three key areas. Enhancing stakeholder value for our customers and our security holders. Pursuing growth where we have the potential to excel. And driving efficiency across our business. Customer community and government expectations continue to evolve, and our approach reflects this. We believe that if we create value for our stakeholders, we create opportunities to grow and continue to replenish our portfolio. And if we do it in a disciplined way, we'll create value for our security holders. We also believe we have a long pipeline of potential growth opportunities, and we're committed to working hard to bring them to fruition. That includes making sure we're an efficient business with a balance sheet that is ready to support growth. Striking the right balance between these three focus areas is what will drive growth in value and distributions for our investors. We've also organised our business and people to better deliver our strategy. We've launched a new operating structure to bring a whole of company view to the way we work. It's about having each of our stakeholders and the key parts of our business represented around the table and driving more business efficiency while we continue to deliver an excellent experience on and off the road. And today we announced two new members to our executive committee as the final stage in the operating model changes. Nicole Stoddart has been appointed Group Executive Delivery and Risk and will be based in Melbourne. and Sarah Hack as Group Executive Corporate Affairs based in Brisbane. We look forward to Nicole and Sarah joining us in the coming months. We've got a great team of people working throughout our business and we're already seeing early benefits of our new model. Things that just wouldn't have been possible a few months ago, like addressing third-party costs with a group-wide lens and making payments easier for customers. and I'm confident that the results will be better for both customer and investor outcomes. All of this better positions us to access the growth opportunities ahead, and we see a lot of avenues for potential growth as demonstrated here. Right now, we have the Westgate Tunnel project, the Northern Extension project, and the M7M12 project all set to open in the next year or two. We then have new opportunities outside of these in negotiation. And 85% of our assets have the potential to be widened, extended or enhanced to meet growing demand. But as I've said before, these opportunities need to be aligned to our business strategy. And we remain disciplined. We need to be clear that we bring more to the table than just a checkbook. We're good at partnering. And we also see ourselves participating in new mobility trends as a technology-driven and customer-focused company. This is a natural fit for us. We've got strong in-house capabilities and we've developed a lot of technologies and platforms that could further develop into ways we reinforce our core. And we'll continue these conversations with our government partners to understand how we can achieve long-term outcomes together. The strategic focus on stakeholders' growth and efficiencies all flow to how we create value for investors. This year, our distribution growth was 7%, more than fully covered by free cash. And in FY25, distribution growth is forecast to be a further 5%. This year, we've seen good translation of traffic to cash to distributions, underpinned by the quality of our asset base that we will continue to grow over time. And in the current uncertain macro environment, this is a position of relative strength and highlights our defensive qualities. At our Invest Today, Henry explained that from next year, we're aligning free cash to our operating performance to provide a more transparent and reliable measure of free cash flow. Our new approach of 95% to 105% of free cash should also provide some flexibility around short-term fluctuations like construction impacts. For a long-term infrastructure business like ours, what we've tried to do is provide more predictability to cut through any short-term noise. Long-term macro trends are continuing to drive traffic across our markets. This year, traffic has increased across all markets with an average of 2.5 million trips made on our roads every day. We do see some impact of construction projects in Sydney and Melbourne, as we've spoken about before. In both markets, we estimate that this disruption has reduced growth this year by around 1%. So without construction impacts, growth would have been closer to 2.5% in each of those markets. But the flip side is that we'll see the benefits of these projects as they come online in the medium and longer term. and that includes our own projects like the Westgate Tunnel project, as well as government projects that will have flow-on benefits to our network. Despite what we're seeing play out in the broader economy, our Australian traffic is holding up relatively well, with impacts very much at the margins. So the bigger focus for us is the construction in our markets and how it will benefit our traffic down the line. We also saw North American traffic return strongly this year, This was driven by strong economic activity in the greater Washington region and the opening of our Fredericksburg extension project. Macroeconomic conditions will always fluctuate, but defensiveness is core to our investment proposition. We have a high-quality asset base with increasing traffic volumes from long-term population and economic growth. In addition, time and time again, we see there is less elasticity of demand, with our customer base continuing to choose our roads. Fuel prices are a great example. We haven't seen a correlation between our traffic volumes and prices at the bowser. But in the near term, while we can't control the macro environment, we're focused on what we have the most influence over, and that's the customer experience, our cost base and capital discipline. A big part of our capital discipline is how we approach our pipeline. The things we haven't bid on are just as important as the opportunities we've gone after. Our approach here hasn't changed. We're not about growth for growth's sake and we'll continue to apply this discipline to all opportunities we consider. As I said earlier, we believe that more value for our customers will translate to more growth opportunities and value for investors. When we ask our customers what's important to them, it's clear that travel time savings are top of mind. The time savings on many of our roads are material to customers. The safety benefits are too. And by spending less time at traffic lights or in congestion, customers are also benefiting from less wear and tear on their vehicles and also saving fuel costs. In Australia, more than one million litres of fuel is saved every workday by taking our roads. equating to a saving of over $2 million a day. We're also focused on providing even more value through our linked rewards program, which has grown fivefold since last year to over a million members. This year, we've added new rewards partners to help our customers save on their expenses. And we recently provided our more frequent customers with a $0.12 per litre bonus fuel discount to help drive their dollar further. It's this customer focus that underpins our licence to grow and gives us a real point of difference when we consider new opportunities. A big focus for us this year was participating in the independent toll review process in New South Wales. The final report was released last month and we're building on the review, working with the New South Wales Government on a clear path forward. we're exploring a range of practical and implementable solutions to make the road network better for Sydney drivers. The New South Wales Government recognises the importance of honouring existing contracts. They also recognise that, along with our partners, we've invested $36 billion into Sydney's motorways, which has provided enormous liveability and productivity benefits. We're confident there's a way to deliver meaningful reform that helps customers in practical ways. And this can be done while also protecting the value of the investment we've made in the city's roads over nearly two decades. In my discussions with government, it's clear we all want to make it easier to get around our growing cities. And that's why we're focused on listening to their priorities and finding solutions that work for them. It's great to see how far construction has come on our projects this year. I was on site at the Westgate Tunnel project a week or so ago and for the first time drove rather than climbed up onto the elevated road near CityLink. It's only been a couple of months since some of you saw this at Invest Today and so much has progressed in that short space of time. It's really fantastic to see all the elements come together and we're looking forward to 2025 as we prepare to open the project to traffic. In Sydney, there's also been a lot of progress on the M7-M12 integration project since construction started nearly a year ago. And work has now begun on building the foundation of the main bridges, which will connect the M7 to the M12. In North America, our Fredericksburg extension project has created the longest reversible road in the United States. And thanks to the extension, travellers who choose the express lanes for a round trip between Fredericksburg and Washington are already saving an average of one hour of their daily commute. We'll grow our express lanes network even further in 2025 when our northern extension project is set to open. And we're continuing to explore the opportunity to add 10 miles of bi-directional travel on our 95 express lanes. These projects are providing long-term solutions for communities in all our markets and reinforcing the value that we bring to our cities. We've talked a lot about growth and our new Logan West upgrade is a great example of us realising opportunities. It's a project that we've been working on for a while now, but through listening to the evolving needs of our government partners, we were able to iterate and move it to binding stage last month. When we talk about populations increasing, there's no better example than Brisbane. Our Logan and Gateway motorways are key freight routes for the region, as they provide access to the Brisbane Airport and Port of Brisbane. But congestion has been getting worse, and we know this can impact productivity. Whilst both motorways need expanding, we've worked with government to phase an upgrade to the Logan as a first step. The project has progressed to the binding upgrade proposal stage, which will determine the final project scope for government to approve. Now, before I hand to Henry, this next slide is not new, but it outlines further the significant pipeline of our opportunities. Today, we have over $12 billion of projects well underway, while we're actively evaluating others. And as I touched on earlier, this includes everything from asset enhancements to potential new projects and acquisitions. The breadth of this pipeline is what gives us the confidence that if we approach it in the right way, we'll be able to pursue growth in areas where we can improve the customer experience as well as returns to our security holders. I'll now hand over to Henry to take us through the financial results.