Transurban Group

Good morning everyone and thank you for joining us for Transurban's first half 26 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, our built on country and with deep respect we incorporate the voices of First Nation peoples in our approach supporting 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've lodged with the ASX this morning. We realise it's a really busy day today. The presentation should take about 20 minutes. That will leave us plenty of time for Q&A, and we'll do our best to get you to your next obligations. I'll now hand over to Michelle to get us started.

Thanks, Craig, and good morning to everyone on the call. Over the past two years, we've been very deliberate in strengthening our foundations to set ourselves up for the next phase of growth, strongly focused on long-term value creation. We adapted our formula to reflect a world of higher interest rates and cost of living. And we've looked to reset our position as a partner of choice for government. We've had three big opportunities to do this. New South Wales toll reform, delivering the Westgate Tunnel project, and by investing in our 11.3 million customers, our most important asset. All while delivering the strong organic growth our security holders expect from their significant capital investments. And I'm really pleased with the momentum on all fronts. Starting with our numbers, we grew revenue by 6% with traffic growing in all markets. We've worked hard to generate more value from the business we have. We have a much stronger top line in North America, our longest concession assets, and we're much more efficient across the board. Through our hard work, our costs are only 1.5% more than the first half of 24, well below cumulative inflation. We've grown half-year distributions by 6.3%, 102% covered by free cash, and maintained our guidance of 6.2% growth for the year. Henry will go through the details shortly, including a couple of timing impacts in the half-on-half comparisons that understate our performance and will normalise over the full year. We're a great business and I believe our strategic advantage will be further strengthened by combining our physical and digital assets, underpinned by our customer focus and our strong relationships. It's about getting the important things right in the right order. We've delivered very tangible outcomes this half. We opened the Westgate Tunnel and the 495 Northern extension, delivering real benefits to motorists and local communities. We've approached toll reform as a collaborative and long-term partner of New South Wales. We've continued to make significant investments in more personalised and transparent customer experiences. And we've taken decisive action to drive the top line and bottom line success of the business, knowing that our investors needed to see returns on the significant capex investments made in recent years. These have been our biggest priorities, and importantly, we've achieved these things in tandem. Looking at traffic, we're seeing good growth across all markets, hitting 2.6 million trips a day. North America continued to perform strongly, up 3.6% for the half, even with the impact of the federal government shutdown. We saw traffic rebound quickly after the shutdown, and this was also helped by the opening of our 495 Northern extension project in November. Brisbane continues to perform well, with strong growth across both weekdays and weekends. And Sydney also delivered underlying growth, despite heavy rain throughout Q1. We're seeing an improvement on CBD assets in Sydney as we start to see traffic distribution normalise across our assets. In Melbourne, traffic grew 3% bolstered by growth in airport passenger volumes and port movements. And Westgate tunnel traffic continues to build with more than a million trips taken since opening, 20% of which have been heavy vehicles in the tunnels. We're now firmly focused on the final outcomes of toll reform. We're building on solutions proposed by the New South Wales Government in December, which will deliver clear benefits for motorists and the state, and protect the $36 billion that Transurban and our partners have invested in Sydney's road network. These reforms include the government making the $60 a week toll cap permanent from 1 July this year, efficiently providing support to car-reliant areas like Western Sydney. We've also indicated a willingness to remove administration fees for toll notices in New South Wales by mid-2026 as part of a comprehensive overhaul of the enforcement process, making payments simpler for motorists and the compliance process more effective. This has been a collaborative and constructive process throughout, with the NSW Government respecting the value of existing contracts. Working to the Government's timetable, we expect the process to be finalised by the middle of the year. It was a really exciting moment to open the Westgate Tunnel in December. From inception, the vision was clear, to deliver benefits for Melbourne that extended well beyond the tunnel itself. That means improving freight connections, taking trucks off local roads, returning neighbourhood streets to the people who live there, and opening up new capacity for Melbourne's West. That experience has been felt from day one, not just on the Westgate Tunnel, but across the broader road network. It was good to open at a quieter time of year, and initial traffic volumes are largely as expected, given the early stage of ramp up. Based on historic trends we've seen on our other assets, new roads can take 18 to 24 months to ramp up. And with populations projected to boom in Melbourne's west, we've built the Westgate Tunnel to benefit the city for the next 50 to 100 years, the same way CityLink still benefits Melbourne drivers today. The Westgate Tunnel is one of three major projects to open in FY26. In Northern Virginia, the new 495 Northern extension has also opened very well with good customer uptake. The new lanes are already improving travel times through one of the most heavily congested parts of the Washington DC metro area. And in Sydney, our M7-M12 integration project is nearing completion, on track to start opening to traffic from next month. Together with the Westgate Tunnel, these new projects are delivering 144 kilometres of new lane capacity, bringing relief to fast-growing communities. Our North American business is continuing to have an outsized positive impact with a step change in the top line. To put things in perspective, it contributed around the same amount of free cash this half as it did for all of FY23. Our investment in new assets like the Fredericksburg extension, the Opitz Boulevard ramp and the 495 Northern extension has opened up more capacity and cut travel times in the region. Drivers are clearly seeing value in time savings and reliability, and with that we're seeing traffic grow even outside of peak periods. We've also taken an active approach to our pricing to better reflect the strong demand for our assets and value proposition. This has bolstered our underlying earnings, which is real value, especially when you consider the longevity of our North American concessions. We take a long-term view on growth, firmly focused on value creation for our customers, our communities and investors. It's about opportunities in the right places, at the right time and on the right terms to deliver long-term value. Enhancements and new connections in our existing markets continue to be an important part of our value proposition, building on our global experience and continuing to deepen our understanding of customers' needs. There's a growing suite of possible enhancements to our existing networks, particularly in North America and Queensland. And in Victoria and New South Wales, we're positioning for medium term opportunities that we anticipate will come in time as we continue to focus on our customers. More broadly, we're exploring new strategic markets with optionality for the future. Working with new partners for the right risk and return trade off today, creating new options for decades to come. For example, we're assessing Atlanta and Nashville and engaging in market sounding processes with the New Zealand government who are keen to build new roads and are taking a modern approach to road user charging. We're also looking at further road user charging trials in Australia, where these reforms will play an important role in driving productivity. The work we've done over the last two years, along with the quality and longevity of our portfolio, allows us to approach new growth opportunities in a fresh and disciplined way, starting with the needs of our customers. I say this because our right to grow starts with our 11.3 million customers. Our customers' experience is twofold. It's both physical on our assets and digital. That's why we're investing in new features like transparency tools that bring to life the value customers get from using our roads. This includes personalised travel time savings in the linked app, allowing customers to quickly see the value of their choices. This dual focus on infrastructure and technology for our customers is an important differentiator, making us a go-to partner and positioning us to take advantage of future mobility trends. Let me now pass to Henry to take you through some more details on the result, and then we'll come back and go to questions.

Thanks, Michelle, and good morning, everyone. We've set out our statutory results on slide 14, but I'll move to the next slide where we've set out our proportional results. Michelle's outlined a number of key areas where we've laid the foundations for growth, and this includes ensuring that we're continuing to run the business efficiently. Proportional toll revenue grew 6.4% to almost 2 billion, and that was supported by good underlying traffic and new capacity coming online from recent investments, as Michelle outlined. Proportional operating costs increased during the period to $474 million, which is a 4.6% increase on the first half of FY25. That's a low base of comparison as the costs in that prior comparable period were down 3%. And it's important to call out that we expect full-year cost growth to remain below inflation, excluding the new asset costs. In fact, when you compare first half of FY26 costs to the cost base two years earlier in the first half of FY24, total costs rose only 1.5%. We show this on the cost slide that we'll come to in a minute. This cost position contributed to proportional operating EBITDA growth of 6.4% and a margin improvement of 30 basis points. Free cash increased 2.4% for the period, which reflects the fact that we brought some financing costs from the second half into this half as part of our refinancing activities. We anticipate that the impact of this timing will normalise in the second half, which supports the free cash position underpinning the 6.2% growth in distributions we're guiding to for FY26. You'll see we've continued to show proportional operating EBITDA this half, which focuses on the performance of the business and excludes a favourable $47 million third party settlement in connection with finalising some construction projects we've undertaken in Queensland. Looking at our funding position and the performance of our debt book, we're very pleased with how the half year concluded. Our weighted average cost of Australian dollar debt rose nine basis points to 4.6%, while we were able to extend the maturity profile of the debt book marginally to 6.9 years on a weighted average basis. As at December 2025, our debt book was 88.6% hedged, which was slightly lower than the 92.5% hedging position at June 2025, and that reflects a modest increase in floating rate exposure that we intend to progressively hedge. Looking ahead, despite the higher interest rate environment, we're only expecting marginal increases in the cost of funding given the staggered maturity profile where no more than 10% of the debt book matures in any given year. I'll provide more detail on our liquidity position shortly, but the headline is that it remains strong with $3 billion in corporate liquidity and additional balance sheet capacity available to support the opportunity pipeline that Michelle just outlined. Slide 16 presents the free cash bridge showing a 2.4 per cent increase, as I said a moment ago. This growth has been affected by the timing of some finance costs that we brought forward that will normalise in the second half. Free cash in FY25 was also weighted to the first half, with the distribution in the prior comparable period 107% covered by free cash, which is also driving the lower headline growth number this half. So we expect this will normalise in the second half to support the distribution guidance of 69 cents for the full year comfortably within our cash coverage range of 95% to 105%. While the weighted average cost of debt rose marginally half on half, underlining finance costs, excluding those costs brought forward, increased $11 million. And that'll increase in the second half with a reduction in interest capitalisation since the opening of Westgate Tunnel, although free cash impact of Westgate is expected to be neutral this year. Interest income also declined slightly, reflecting lower average cash balances over the period. And in addition, tax paid increased modestly across parts of the group. Turning to the proportional results on slide 17, our half-on-half operating EBITDA growth was underpinned by the strong performance from our Transurban Chesapeake business in Virginia, which we've called out for a number of halves now. Combined with the ongoing cost control across the group, our EBITDA operating margin continued to expand by an additional 30 basis points. Looking at costs in more detail, you can see the continued stability of proportional operating costs across multiple periods on slide 18. Costs increased 4.6 this half, but as I've mentioned earlier and Michelle's mentioned, that really reflects the fact that the first half of FY25 was low due to the timing of maintenance costs last year. And as I said earlier, when you look back over two years, you can see that we're only 1.5% above the first half of FY24 number. Maintenance is an area that we continue to see some cost escalation in the coming years as several assets move into their next major maintenance cycle and that includes WestConnex which is entering its first major cycle. That's something we're focused on and we continue to identify meaningful opportunities to enhance our maintenance program and refine our asset lifecycle models. With the new enterprise operating model now in place, we're better equipped, we think, to manage maintenance costs, helping to drive efficiencies and support long-term portfolio optimisation. Road operating costs were also up for the half, which relates to escalation in large incident response and maintenance contracts that we have in place, as well as the tolling expenses associated with things like toll notice costs. Both of those are areas where we see opportunities to contain the cost growth going forward. I think importantly we still see opportunities for further efficiency across our cost base and we expect FY26 cost growth to remain below inflation for the year excluding new assets. As we've said previously that's also subject to the level of development activity which can vary with the opportunity set in front of us. Turning to our balance sheet and funding summary, after accounting for the committed project spend and distributions, our corporate liquidity is $3 billion, with a further $2.5 billion of balance sheet capacity that positions us well to support further growth. As you can see on the right-hand side of the slide, our Treasury team have completed our FY26 funding task, and through a liability management exercise undertaken in December last year, we've progressed the funding task for FY27, 28 and 30. And finally, despite periods of volatility in debt capital markets, we've continued to achieve strong outcomes in our funding activity. And this demonstrates the depth of our financing relationships and the strength of our balance sheet and credit profile. If I turn to slide 20, you can see how we're well positioned in the current macroeconomic environment. Despite ongoing volatility in the interest rates and inflation globally, our portfolio structure continues to provide strong insulation and predictability. Over the past six years, our weighted average cost of debt has increased by only 30 basis points, despite significant market volatility, which we've shown here. In that same time, we've had consistent access to liquidity, refinancing $45 billion in debt, and this reflects consistency in execution of our refinancing strategy and discipline management of the debt book. Just under 90% of our proportional drawn debt is hedged, substantially limiting exposure to short-term rate movements. Our 6.9-year weighted average tenor and staggered maturity profile avoids concentrated refinancing risk, giving us flexibility to approach refinancing strategically rather than reactively. Importantly, over 90% of our revenue base benefits from contracted CPI linked or fixed pricing escalation, which helps provide a natural hedge at the top line. And we've shown that here. This helps offset the impacts of inflation on our cost base and supports earnings growth through the cycle. So when you bring this together, our hedging program, debt maturity profile and inflation linked escalators, we're well positioned for a higher inflation environment. Slide 21 highlights our capital allocation framework, an approach we've used consistently and one that continues to guide disciplined value accretive decision making. It provides a clear view of how we manage the portfolio to deliver reliable distribution growth while creating the balance sheet capacity to reinvest for the future. In the first half of FY26 we delivered 6.3% growth in distributions per security, supported by 6.4% operating EBITDA growth, demonstrating the strength of our model and the momentum across the portfolio. We invested 300 million in capex during the period with a similar level expected in the second half, ensuring that we continue to deliver key projects. And our balance sheet remains in a strong position to support further opportunities. And we continue to actively assess potential investments, both within our existing portfolio and in new markets where we see long-term value. So stepping back, we're very pleased with the business performance this half marked by good traffic volumes, disciplined cost management and continued margin expansion. This provides the foundation for further growth opportunities. From a funding perspective, our position remains robust. We're well placed to pursue new opportunities, both within the core business and in new markets where we see further potential to create security hold of value. I'll now hand back to Michelle for closing remarks.