2017
Transurban
Annual Report
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Australia
Melbourne (cid:11)(cid:75)(cid:72)(cid:68)(cid:71)(cid:3)(cid:82)(cid:605)(cid:70)(cid:72)(cid:12)
Level 23
Tower One, Collins Square
727 Collins Street
Docklands
Victoria 3008
Sydney
Level 9
(cid:20)(cid:3)(cid:38)(cid:75)(cid:76)(cid:565)(cid:72)(cid:92)(cid:3)(cid:54)(cid:84)(cid:88)(cid:68)(cid:85)(cid:72)
(cid:54)(cid:92)(cid:71)(cid:81)(cid:72)(cid:92)
New South Wales 2000
Brisbane
7 Brandl Street
Eight Mile Plains
Queensland 4113
Mailing Address
Locked Bag 28
South Melbourne Victoria 3205
Phone +61 3 8656 8900
Fax +61 3 8656 8585
United States
Washington DC Area
(cid:25)(cid:23)(cid:23)(cid:19)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:42)(cid:85)(cid:72)(cid:72)(cid:81)(cid:3)(cid:58)(cid:68)(cid:92)
Alexandria VA 22312
United States
Phone 571 419 6100
Email corporate@transurban.com
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transurban.com
Contents
E(cid:81)(cid:84)(cid:88)(cid:76)(cid:85)(cid:76)(cid:72)(cid:86)
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Transurban’s 2017 Corporate Governance Statement is located at
www.transurban.com/corporate-governance-statement
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The stapled securities register is maintained by Computershare
Investor Services Pty Ltd.
If you have a question about your Transurban securities
or distributions please contact:
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Yarra Falls
452 Johnston Street
Abbotsford, Victoria 3067
Australia
(cid:48)(cid:68)(cid:76)(cid:79)
The Registrar
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne, Victoria 3001
Australia
(cid:51)(cid:75)(cid:82)(cid:81)(cid:72)
(Australia ) 1300 555 159
(Overseas) +61 3 9415 4062
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Transurban Holdings Limited
Transurban Holdings Limited
and Controlled Entities
and Controlled Entities
ABN 86 098 143 429
ABN 86 098 143 429
(Including Transurban International Limited and Transurban Holding Trust)
(Including Transurban International Limited and Transurban Holding Trust)
Annual report
Annual report
for the year ended 30 June 2017
for the year ended 30 June 2017
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2017 Transurban Annual Report
Contents
Directors’ report…………………………………………………………………………………………………………….…3
Section A: Group financial statements…………………………………………………………………………………….45
Section B: Notes to the Group financial statements……………………………………………………………………..52
Section C: Transurban Holding Trust (‘THT’) and Transurban International Limited (‘TIL’) financial statements...96
Section D: Notes to the THT and TIL financial statements………………………………………………..…………..101
Section E: Signed reports……………………………………………………………………………………..…………..113
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2017 Transurban Annual Report
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 2017 (‘FY17’). The controlled entities of THL include the other members of the stapled group being TIL
and THT.
Result
Statutory results
§ Toll revenue increased 11.4 per cent to $2,083 million;
§ Profit from ordinary activities after tax increased 850.0 per cent from $22 million to $209 million;
§ Profit from ordinary activities after tax excluding significant items1 increased 41.2 per cent to $209 million;
§ Earnings before depreciation and amortisation, net finance costs, equity accounted investments and income
taxes (‘EBITDA’) increased 22.3 per cent to $1,526 million;
§ EBITDA excluding significant items1 increased 10.7 per cent to $1,526 million;
§ Statutory net profit attributable to security holders of the stapled group increased 141.4 per cent to $239
million; and
§ Statutory net profit attributable to security holders of the stapled group excluding significant items1 increased
34.3 per cent to $239 million.
Proportional results
§ Toll revenue increased 10.6 per cent to $2,153 million;
§ EBITDA2 increased by 16.5 per cent to $1,629 million;
§ EBITDA2 excluding significant items1 increased by 10.1 per cent to $1,629 million; and
§ Free cash increased 31.7 per cent to $1,220 million.
Distributions
Final distribution (declared prior to reporting date)
Final dividend (declared prior to reporting date)
Interim distribution for the current year
Interim dividend for the current year
Final distribution (prior year)
Final dividend (prior year)
Amount per
security
Cents
Franked amount
per security
%
23.0
3.5
26.5
21.5
3.5
25.0
19.5
3.5
23.0
–
100
–
100
–
100
Record date for determining entitlements to distribution and dividend
Date of payment of final distribution and dividend
30 June 2017
11 August 2017
1. Significant items are those items where their nature and amount is considered material to the financial statements and not in the ordinary
course of business. Refer to note B6 of the Group financial statements for further information.
2. Refer to Note B4 of the Group financial statements for the definition of proportional EBITDA.
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2017 Transurban Annual Report
Principal activities
The principal activities of the Group during the financial year were the development, operation, maintenance and
financing of toll road networks as well as management of the associated customer and client relationships.
Operating and financial review
Our business
Transurban manages and develops urban toll road networks in Australia and the United States of America.
The Group owns concession assets across four key market segments: Victoria (‘VIC’), New South Wales
(‘NSW’), Queensland (‘QLD’) and the Greater Washington Area (‘GWA’).
Transurban is listed on the Australian Securities Exchange (‘ASX’) and has been in business since 1996.
Strategy
Transurban’s target markets are the eastern seaboard of Australia and North America.
At the heart of our business strategy is our desire to be a partner of choice for our government clients and an
organisation that meets the needs of our customers and the community. To achieve this, we strive to provide
effective transportation solutions to support the growth and development of the cities in which we operate.
At Transurban we do this through management of our existing road networks, through our active involvement in
the transport policy debate, and by applying our unique skills to the infrastructure challenges in our markets.
In delivering on this objective our business has fostered core capabilities in the following areas:
§ Network planning and forecasting;
§ Community engagement;
§ Development and delivery;
§ Technology; and
§ Operations and customer management.
Value proposition
Transurban has an interest in 15 operating assets across four markets. The investment proposition for high
quality toll road assets lies in providing investors with access to long dated, predictable, growing cash flows
generated over the life of the concession.
Organic growth is derived from traffic growth and toll escalation. It is supported by Transurban’s ability to meet
the service expectations of our customers to provide efficient corporate and operational services at scale across
its portfolio.
In addition, Transurban continues to invest in the ongoing development of our portfolio and expand our initiatives
in customer engagement, sustainability, technology and safety to create value for all our stakeholders.
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2017 Transurban Annual Report
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2017 Transurban Annual Report 5 Operating and financial review (continued) Segments 1. Airportlink M7 was acquired on 1 April 2016. 2. Westlink M7 and NorthConnex form the NorthWestern Roads Group. Concession assets timeline Below is a list of the concession asset end dates (calendar year ends). Operating and financial review (continued)
Accounting for assets – changes during the year
During the year ended 30 June 2017, there have been no significant changes in the accounting for our assets.
Group financial performance
Financial performance indicators
The Transurban Board and management assess the performance of the networks in which we operate based on
a measure of proportional earnings before depreciation, amortisation, net finance costs and income taxes
(‘Proportional EBITDA’) excluding the impact of significant items (‘Underlying proportional EBITDA’). This reflects
the contribution of each network in the Group in the proportion of Transurban's equity ownership.
Significant items are those items where their nature and amount is considered material to the financial
statements and not in the ordinary course of business.
To arrive at the proportional result, minority interests in Transurban’s controlled roads are taken out and
Transurban’s interests in non-controlled assets are included, in proportion to Transurban’s ownership.
Free cash is the primary measure used to assess Transurban’s cash generation. Free cash is used as the guide
to determine distributions to security holders.
Year ended 30 June 2017 highlights
Statutory results
Toll revenue
EBITDA
Net profit/(loss)
EBITDA excluding significant items
Net profit after tax excluding significant items
FY17
$M
2,083
1,526
209
1,526
209
FY16
$M
1,870
1,248
22
1,379
148
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2017 Transurban Annual Report
Operating and financial review (continued)
Proportional EBITDA
Segment information in note B4 to the financial statements presents the proportional result for Transurban Group,
including reconciliations to the statutory result. Management considers proportional EBITDA to be the best
indicator of asset performance. The table below also provides FY17 results adjusted to exclude certain
acquisitions and new assets so as to compare the performance of the existing business to the prior year result.
Toll revenue
Other revenue
Total costs
EBITDA excluding significant items
Significant items
EBITDA
FY17
$M
2,153
58
(582)
1,629
-
1,629
FY16
$M % Change
FY17
Adjusted1
$M
FY16
Adjusted1
$M % Change
1,946
60
(526)
1,480
(82)
1,398
10.6%
(3.3%)
10.6%
10.1%
(100%)
16.5%
2,083
58
(564)
1,577
-
1,577
1,929
60
(521)
1,468
(7)
1,461
8.0%
(3.3%)
8.3%
7.4%
(100%)
7.9%
1. Excludes contributions associated with AirportlinkM7.
Financial position
Market capitalisation – 30 June
Securities on issue – 30 June
Cash and cash equivalents
FY17
M
FY16
M
$24,320
$24,406
2,052
$988
2,036
$834
Transurban’s operating assets are primarily long-life intangible assets (concession assets), representing the
provision by Government entities for the right to toll customers for the use of the assets. Concession assets
represent 76 per cent of the total assets of the Group. The total duration of the concessions typically range from
approximately 30 to 80 years, and for accounting purposes the carrying values are amortised on a straight line
basis over the duration of the concession.
Free cash
Free cash
Weighted average securities eligible for distribution1
Free cash per security (cents)
FY17
FY16
% Change
$1,220M
2,048M
59.6
$926M
1,978M
46.8
31.7%
3.5%
27.4%
1. New securities issued during the year are included only to the extent they were eligible for the interim and/or final distribution.
Movements in free cash during the period have been influenced by:
§ $59 million growth in EBITDA from 100% owned assets
§ ($58) million decrease due to higher net finance costs paid due to timing of cash flows on new and refinanced
debt
§ $77 million increase in non-100% owned assets distributions received due to higher distributions from M5 ($29
million) associated with the timing of payment of FY16 distributions, Transurban Queensland (excluding
AirportlinkM7) ($15 million), Eastern Distributor ($11 million) and NorthWestern Roads Group distributions
($22 million)
§ $38 million increase due to distributions received from AirportlinkM7
§ $174 million increase from the NorthWestern Roads Group capital release
§ $4 million increase due to favourable year-on-year movements in working capital and maintenance expense
The weighted average securities eligible for distribution have increased due to the impact of the equity issued in
December 2015 to support the acquisition of AirportlinkM7. These securities issued in December 2015 were
eligible for the FY16 2nd half distributions only, but were entitled to both distributions in FY17.
Note B10 to the statutory accounts provides a detailed calculation of free cash.
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2017 Transurban Annual Report
Operating and financial review (continued)
Network performance
Network
Highlights
Proportional
toll revenue
contribution
Traffic growth
(average daily
trips)
Toll
revenue
growth
EBITDA
growth2
Sydney
§ The network continues to perform well with
40.5%
3.4%
9.2%
10.2%
large vehicle growth
§ M2 traffic impacted by NorthConnex
construction works
§ Weekend traffic growth of 4.7%
Melbourne
§ Disruption impacts from major CityLink-
31.9%
(1.0%)
4.1%
5.3%
Tulla Widening (”CTW”) works continued
§ Opened approximately 35% of new
capacity associated with CTW
§ Heavy Commercial Vehicle (“HCV”)
multiplier moved to 3 times cars on 1 April
2017 as per concession agreement
Brisbane1
§ Traffic growth improving with large vehicle
17.9%
15.0%
22.9%
97.1%
growth exceeding cars
§ HCV multipliers increasing to 3 times cars
on Clem7 and Go-Between Bridge (“GBB”)
as of 1 July 2018 and on Legacy Way 1
July 2020
§ Legacy Way car tolls increasing by 7.8%
on 1 July 2020
Greater
Washington
Area3
§ Ramp up continues with traffic and
9.7%
12.8%
23.7%
39.2%
revenue growth
§ Traffic demand drove average dynamic toll
price increases of 21% for 495 Express
lanes and 19% for 95 Express Lanes
compared to FY16
1. Excluding Transurban Queensland integration and acquisition costs in FY16, EBITDA increased 22.9% (including AirportlinkM7).
2. Excluding AirportlinkM7, ADT increased 2.3%, toll revenue increased 6.3% and EBITDA increased 4.9%.
3. Toll revenue and EBITDA growth are calculated in USD.
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2017 Transurban Annual Report
Operating and financial review (continued)
Sydney
Operations
Operational enhancement
§ Successfully commissioned Eastern Distributor variable speed management system
§ Completed M2 Motorscapes public art and five hectare bush regeneration project
§ Development of new mobile hazard reporting devices
§ Launch of new retail brand Transurban Linkt
Development
NorthConnex
§ Project currently on time and on budget
§ 19 road headers in operation
§ Seven of 21 kilometres of tunnelling completed
§ First spoil delivered to Hornsby Quarry in May 2017
§ Accelerating Hills M2 integration works to minimise impact on Hills M2 customers
§ Westlink M7 large vehicle multipliers reached 3 times cars in January 2017
Melbourne
Operations
CityLink Operations
§ Preparation, safety and development work underway for connected and automated vehicles (CAV) trials.
Car manufacturers testing how partial automation technologies interact with motorway infrastructure
Development
CityLink Tulla Widening
Western Gate Tunnel Project
§ Total project cost approximately $1.3 billion
§ Total project cost approximately $5.5 billion
§ CityLink upgrade to be completed early 2018
§ CPB Contractors John Holland Joint Venture
§ Construction proceeding on time and on budget –
80% complete
§ 35% of new capacity already opened
§ Over 80,000 trees planted to date
§ New community grants program and Landcare
partnership launched
selected as preferred tenderer
§ Financial close expected by late 2017 with the
Inquiry and Advisory Committee report to be
submitted to Minister for Planning by 23 October
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2017 Transurban Annual Report
Operating and financial review (continued)
Brisbane
Operations
Brisbane Operations
§ GLIDe on schedule for implementation by the end of 2017; will enable customer initiatives including digital
self-service channels, mobile apps and notice of demand aggregation (subject to State Government
approval)
§ Tunnel network operations and maintenance (“O&M”) contract executed and the onboarding of Legacy Way
onto this contract is progressing on time
Development
Logan Enhancement Project (“LEP”)
Inner City Bypass (“ICB”)
§ Total project cost $512 million
§ Major construction started in July 2017
§ Construction underway
§ Logan and Gateway HCV tolls increasing post-LEP
(completion expected mid-2019)
§ Design refinements to improve accessibility and
reduce environmental footprint at Wembley Road
and Gateway Extension interchanges
§ Transurban to manage delivery and assume
operations of the ICB post-upgrade
§ Project funded via HCV multipliers increasing to 3
times cars on Clem7 and GBB on 1 July 2018 and
Legacy Way 1 July 2020 and via Legacy Way car
tolls increasing by 7.8% on 1 July 2020
§ Construction completion scheduled for mid-2018
Greater Washington Area
Operations
95 Express Lanes and 495 Express Lanes
§ Partnership with Virginia State Police on incident management and safety
§ Delivered first phase of next generation cloud-based back office system
§ Launched start-up challenge on innovative transportation ideas
Development
Southern Extensions to 95 Express Lanes
395 Express Lanes
§ Anticipated early completion in December 2017 on the
three km southern extension of 95 Express Lanes
§ Advanced development framework for the 14 kilometre
extension south to the Fredericksburg area agreed
with the Virginia Department of Transportation in June
2017
§ Preliminary engineering under way
§ Total project cost USD $475 million
§ Early works began in February 2017
§ Financial close reached in July 2017
§ Construction completion expected end of 2019
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2017 Transurban Annual Report
Operating and financial review (continued)
Financing activities
During the reporting period Transurban executed a number of financing activities including:
July 2016
Westlink M7 issued AUD$500 million of 7 and 10 year Australian Medium Term Notes.
Lane Cove Tunnel drew down AUD$200 million of non-recourse debt. The debt was provided
by banks and private placement investors for terms of 5 and 12 years respectively.
NOK 750 million of corporate senior secured 11 year notes were issued via private placement
under the Euro Medium Term Note Programme.
September 2016 USD$550 million of corporate senior secured 10.5 year notes were issued in the US 144A
bond market.
October 2016
Transurban Queensland issued AUD$200 million of 7 year senior secured Australian Medium
Term Notes.
November 2016 Transurban Queensland issued CHF 175 million of 10 year senior secured Swiss bonds
under the Euro Medium Term Note Programme.
A 3 year corporate working capital facility for AUD$100 million and an AUD$50 million Letter
of Credit facility were established as part of a refinancing of existing facilities.
December 2016 Transurban Queensland issued AUD$774 million of US Private Placement Notes. The notes
were issued in four tranches of approximately AUD$204 million, AUD$293 million, AUD$177
million and AUD$100 million with tenors of 10,12,15 and 18 years respectively. Settlement
occurred in December with the 18 year tranche settled in January 2017.
A 5 year corporate working capital facility for AUD$125 million was established as part of a
refinancing of existing facilities.
Cross City Tunnel non-recourse debt was refinanced with a new non-recourse 3 year term
bank debt facility of AUD$278 million.
Transurban Queensland established a new 3 year AUD$820 million bank debt facility and
refinanced an existing 3 year AUD$25 million working capital facility.
March 2017
Westlink M7 issued AUD$535 million of 10 and 10.5 year Australian Medium Term Notes.
May 2017
Westlink M7 priced AUD$200 million of US Private Placement Notes. The notes will be issued
in two tranches of AUD$100 million each with tenors of 12 and 15 years respectively.
Settlement is due to occur in August 2017.
There were no changes to the Transurban Group ratings provided by Standard and Poor’s Financial Services
LLC rating service, Moody’s Investors Services Inc. or Fitch Ratings Inc. during the period.
Funding structure
The following diagram shows the non-recourse and corporate debt balances of the Group.
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2017 Transurban Annual Report
Operating and financial review (continued)
Debt maturity profiles
The following charts show the Group’s current debt maturity profile based on the total facilities available. The
charts show the debt in the financial year it matures and in the case of the non-recourse debt, the full value of the
debt facilities has been shown as this is the value of debt for refinancing purposes.
The debt values are shown at 30 June 2017, with US, Euro, Canadian and Swiss denominated debt converted at
the hedged rate where cross currency swaps are in place. Unhedged US dollar debt has been converted to
Australian dollars at spot exchange rate ($0.77 at 30 June 2017).
Corporate debt maturity profile
Non-recourse debt maturity profile
Financial risk management
Transurban’s exposure to financial risk management and its policies for managing that risk can be found in the
Financial Risk Management notes in the financial statements – note B15. This section discusses Transurban’s
hedging policies, credit risk, interest rate risk and liquidity and funding policies.
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2017 Transurban Annual Report
Operating and financial review (continued)
Corporate activities
People
At Transurban we aim to create an environment where our people are encouraged to reach their full potential,
and are recognised and rewarded for their achievements. We aim to celebrate the different cultures of our
employees and believe it is important our workforce reflects the broader population and communities in which we
operate.
This year, our internal employee opinion survey (EOS) showed that 80% of employees are proud to work for
Transurban and 85% believe in our values of Integrity, Collaboration, Accountability, Ingenuity and Respect.
The EOS survey rated Leadership Effectiveness at 82%, which is significantly higher than the Global norm and in
line with the Best in Class norm of top 25% of organisations.
We are dedicated to the ongoing development of our existing and future leaders. Senior leaders attend an annual
Senior Leadership Program, while there is a continued focus on building greater leadership capability through
other levels of the organisation and attracting the next generation of Transurban leaders and professional /
technical experts through our graduate program.
Transurban conducts a bi-annual talent review with the Executive and Senior Leadership teams. This review
helps identify high potential individuals who have the ability to move into Senior Leadership or Executive roles, or
those who may be able to move laterally outside of their area of technical expertise. In addition, we recognise
those individuals with exceptional technical skills that are highly valued by the organisation.
We have developed relationships with key universities enabling the establishment of summer internships for
engineering and business graduates and have continued programs including the Monash Industry Team Initiative
with 16 students across four teams working on business projects for 12 weeks and our Females Excelling in
Engineering and Technology (FEET) program with 47 students completing 35 hours of mentoring across the
business in 2017.
We focus on developing a high performance culture through differentiating performance. The Short Term
Incentive (‘STI’) program includes formal performance comparisons against peers, which strengthens the link
between individual employee performance and Group performance. We offer a range of employee benefits
including an employee share scheme and group insurance including salary continuance, death and permanent
disablement insurance cover. The EOS survey highlighted an increase in the Performance Excellence index to
73% in 2017.
There is ongoing focus on Diversity and Inclusion, and progressing our key priority areas of gender diversity,
cultural diversity and workplace flexibility. In FY2017 we received the Employer of Choice for Gender Equality
(EOCGE) award for the third year in a row. We were also recognised through the Equileap Diversity Award as a
top 20 company globally for gender equality; received the Best Action for Supporting Diversity in the ITS
Workforce Award; and Engineers Australia Most Ambitious Company in Gender Diversity award. We conduct an
annual pay equity review with a focus on achieving a zero pay gap.
At Transurban, we believe in a holistic approach to wellbeing. In addition to being healthy; physically and
mentally, we encourage employees to be connected with others in the community and recognise achievement at
work.
We have a number of awareness and education programs as well as an awards program to recognise
employees’ achievements.
The Transurban Annual Awards recognise employees’ achievements in customer service, diversity, ingenuity,
safety, sustainability and overall business excellence. We recognise both what our employees do and how they
go about it through the thanksTU program, which encourages employees to reward a colleague for an
achievement which demonstrates our values.
Our employee volunteer program gives employees the opportunity to take one day of paid volunteer leave each
year. With strong support demonstrated through feedback and participation rates in this program, it remains a key
area of focus for our Wellbeing Program.
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2017 Transurban Annual Report
Operating and financial review (continued)
Sustainability
Transurban's vision ‘to strengthen communities through transport’ is closely supported by our sustainability
strategy. We are committed to making sure that our roads help make our cities great places to live and work —
both now and in the future.
Transurban’s sustainability strategy has three key pillars:
§ Be good neighbours: We will work with communities to create shared value with our business by anticipating,
listening and responding to community needs;
§ Use less: We will minimise natural resource use and create resource efficiencies during development,
operations and maintenance to reduce the impacts of our operations on the community and environment; and
§ Think long term: We will look for innovative transport solutions that will create efficient, safe transport networks
and thriving cities.
During the period Transurban continued with a range of social and environmental sustainability initiatives
including:
§ Three major projects awarded an independent Infrastructure Sustainability (IS) Design Rating: a ‘Leading’
rating for NorthConnex and ‘Excellent’ ratings for Gateway Upgrade North and CityLink Tulla Widening;
§ Completion of two roadside regeneration projects in Melbourne and Sydney, including iconic public art and
partnering with Landcare Australia to restore native vegetation, improve biodiversity and community amenity;
§ Commitment of land and funding for Transurban’s Heathwood Community Development project, a community
facility to be delivered as part of the Logan Enhancement Project;
§ Partnership with Neuroscience Research Australia (NeuRA) to establish the Transurban Road Safety Centre,
providing state-of-the-art facilities and equipment to study practical injury prevention strategies;
§ Three new innovation grants awarded to research groups investigating smart road surface materials, LED
road safety sensors and lighting, and improved motorcycle safety barriers;
§ Community investment through major local partnerships, grants, employee volunteering and support for a
range of community and charitable organisations;
§ Commencing the next stage of Transurban’s reconciliation journey through the release of our ‘Innovate’
Reconciliation Action Plan (RAP);
§ Customer service improvements including Transurban’s new retail brand Linkt, new customer account
choices, mobile phone apps and customer engagement initiatives;
§ Continued efforts towards our ‘10-in-10’ commitment to reduce our energy consumption by 10% by 2023;
§ Thought leadership and practical trials on road funding reform through Transurban’s Road Usage Study; and
§ Recognition in independent sustainability benchmarks and awards including the Dow Jones Sustainability
Index (DJSI) World Index and Industry Mover Award.
Transurban provides regular progress reports to the Board on our focus areas. The annual Sustainability Report
summarises the year’s activities and outlines commitments for the coming years.
The 2017 Sustainability Report will be published in October 2017 and will be available via the Transurban
website.
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Operating and financial review (continued)
Health, Safety & Environment
Improving the Health, Safety and Environment (HSE) performance at Transurban continues to be a primary focus
for our business. During the year ended 30 June 2017, we were committed to managing the key HSE risks and
integrating HSE into every part of our business.
Tragically, our contractor on the NorthConnex project suffered an employee fatality during the year. We also had
6 contractor lost time injuries (LTI) across our assets (3) and major projects (3), two employee LTI’s, which
resulted in the employee recordable injury rate (RIFR) for the year being 0.95, which is above our zero target.
After more than 10 million hours across Transurban assets and major projects, the contractor RIFR was below
the 6.38 target at 4.79.
Customer road safety is key to our business. The Road Incident Crash Index (RICI) reduced to 4.85 over the past
12 months, which was above our 4.16 target.
Consistent with our focus on improving HSE performance, we undertook a number of initiatives and supported
critical research to enhance the safety of our customers and the community. These included:
§ Partnership with Neuroscience Research Australia (NeuRA) to establish the Transurban Road Safety Centre
in Sydney. NeuRA is one of the world’s leading centres of neuroscience research and studies practical injury
prevention strategies using facilities and equipment that simulate road accidents.
§ Introduction of an improved Incident Response Model on CityLink to better manage incidents on our network,
clear the road quickly and safely and help keep traffic moving.
§ Two major Innovation Grants awarded for road safety research. These included investigating improvements to
wire rope barriers for motorcycle safety, and using smart LED sensor lighting embedded into road surfaces to
detect and communicate vehicle speed and road safety signals to drivers.
§ A range of awareness and education programs to support the United Nation’s Global Road Safety Week.
§ Strengthening of our Road Safety Strategic Framework and implementing strategic road safety actions that
aim to reduce crashes and improve safety on our network. Our strategy and action plans are informed by
detailed traffic and incident data from Transurban and public road networks, along with expert advice and
research from organisations such as the Australian Road Research Board and Monash University Accident
Research Centre.
Business risks and opportunities
The following are key opportunities that may impact Transurban’s financial and operating result in future periods:
§ Ability to leverage capabilities to enhance motorway networks;
§ Greater than forecast traffic volumes;
§ Integration of consistent technology and systems to enhance network footprint;
§ Ability to harness knowledge and experience to drive operations and maintenance;
§ Identification of new business opportunities in Transurban’s target markets; and
§ Application of sustainability initiatives to enhance road user and local community experiences.
The following are key risks that may impact Transurban’s financial and operating result in future periods:
§ Reduced traffic volumes or an inability to grow traffic volumes;
§ Change in government policies;
§ Competitor growth or behaviour;
§ Access to suitable financing arrangements;
§ Safety incidents through operations or driver behaviour;
§ Dependency on the services of key contractors and counterparties;
§ Unfavourable changes to market or operating conditions;
§ External cyber-attacks and failure to protect our information ; and
§ Failure of technical infrastructure.
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Operating and financial review (continued)
Risk management
Managing risk is an essential part of our business. Key risks are regularly reviewed by the Board, the Audit and
Risk Committee and our Executive Committee.
Transurban has a business-wide risk framework in place to help create a consistent and rigorous approach to
identifying, analysing and evaluating risks. This framework has various policies, standards and guidelines
attached to it, including the Risk Management Policy which can be found in the Corporate Governance section of
our website (transurban.com).
The framework is overseen by the Audit and Risk Committee and is actively managed by the Executive
Committee. It is consistent with AS/NZ31000:2009 and is subject to regular review by internal audit. Our Audit
and Risk Committee Charter is also available in the Corporate Governance section of our website.
Company secretaries
Amanda Street LLB (Hons), BComm
Amanda joined Transurban in September 2008 and was appointed as Company Secretary in February 2011.
Before joining Transurban, Amanda was Assistant Company Secretary at AusNet Services, and Senior
Corporate Counsel at National Australia Bank. She has over 17 years of legal, company secretariat and other
relevant experience. Prior to her in-house work, Amanda was a solicitor specialising in M&A work with Australian
law firm King & Wood Mallesons.
Julie Galligan LLB, BA
Julie joined Transurban in November 2008 and was appointed as General Counsel in February 2012. Julie has
over 17 years of legal experience in private practice and in-house roles in both Australia and the United Kingdom.
Prior to joining Transurban, Julie worked in-house at Associated British Ports and at law firms, SJ Berwin LLP
and MinterEllison.
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Operating and financial review (continued)
Meetings of directors
The number of meetings of the Boards of Directors of THL, TIML and TIL and each Board Committee held during
the year ended 30 June 2017, and the number of meetings attended by each Director are set out in the following
tables.
Meetings of the Boards of Directors of THL, TIML and TIL were held jointly.
Board of Directors
Audit & Risk
Committee1
Remuneration &
HR Committee2
Nomination
Committee3
Attended Held Attended Held Attended Held Attended Held
9
9
9
9
9
9
9
9
4
9
9
9
9
9
9
9
9
4
6
6
6
6
1
6
*
6
2
6
*
6
6
*
6
*
4
*
5
5
5
5
5
2
1
1
2
*
*
5
5
5
*
*
*
1
3
3
3
2
2
3
3
3
2
3
*
3
3
3
3
3
3
2
Lindsay Maxsted
Scott Charlton
Neil Chatfield
Robert Edgar
Samantha Mostyn
Christine O'Reilly
Rodney Slater
Peter Scott
Jane Wilson4
* = Not a member of the relevant Committee
1. Scott Charlton, Samantha Mostyn and Jane Wilson were not members of the Audit and Risk Committee but attended meetings as observers
during the year. Peter Scott became a member of the Audit and Risk Committee on 1 September 2016. He attended meetings prior to that
date as an observer.
2. Lindsay Maxsted, Scott Charlton, Christine O’Reilly, Rodney Slater and Peter Scott were not members of the Remuneration and Human
Resources Committee but attended meetings as observers during the year. Scott Charlton was excluded from discussions involving his
remuneration during meetings that he attended. Jane Wilson became a member of the Remuneration and Human Resources Committee on
23 May 2017. She attended meetings prior to that date as an observer.
3. Scott Charlton was not a member of the Nomination Committee but attended meetings as an observer during the year.
4. Jane Wilson was appointed to the Board of Directors on 1 January 2017.
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Directors
The following persons were Directors of THL, TIML and TIL during the whole of the financial year and up to the
date of this report, unless otherwise stated:
Lindsay Maxsted
Dip Bus, FCA, FAICD
Chair and independent Non-executive Director
Director since 1 March 2008. Chair since 12 August 2010.
Chair of the Nomination Committee and a member of the Audit and Risk Committee.
Lindsay is currently Chair and a Non-executive Director of Westpac Banking Corporation,
and a Non-executive Director of BHP Billiton Limited and BHP Billiton plc. He is the
Managing Director of Align Capital Pty Limited and the Honorary Treasurer of Baker Heart
and Diabetes Institute.
Lindsay was formerly a partner of KPMG Australia and was the CEO of that firm from 2001
to 2007. His principal area of practice prior to this was in the corporate recovery field
managing a number of Australia’s largest insolvency / workout / turnaround engagements.
As at the date of this report, Lindsay holds interests in 70,258 stapled securities.
Scott Charlton
BSci, MBA
Chief Executive Officer and Executive Director
Director since 16 July 2012. CEO since 16 July 2012.
Scott joined Transurban from Lend Lease, where he was Group COO (from November
2011) and Group Director of Operations (from March 2010). Prior to this, Scott held several
senior appointments across a range of infrastructure entities and financial institutions,
including as CFO of Leighton Holdings Limited (2007 to 2009) and as Managing Director of
Deutsche Bank in Australia and Hong Kong (1995 to 2003).
Scott is currently Deputy Chair of Infrastructure Partnerships Australia and is a member of
the Monash Industry Council of Advisors, the Business Council of Australia, and of Roads
Australia.
As at the date of this report, Scott holds interests in 1,197,095 stapled securities (held
indirectly), 935,843 Performance Awards (LTIs - unlisted) and 100,843 STI Deferred
Securities (unvested).
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2017 Transurban Annual Report
Directors (continued)
Neil Chatfield
M.Bus, FCPA, FAICD
Independent Non-executive Director
Director since 18 February 2009.
Chair of the Audit and Risk Committee and a member of the Remuneration and Human
Resources Committee and the Nomination Committee.
Neil is an established Executive and Non-executive Director with extensive experience
across all facets of company management, and with specific expertise in financial
management, capital markets, mergers and acquisitions, and risk management.
Neil is currently the Chair and a Non-executive Director of Seek Limited and Costa Group
Holdings Limited. Neil is also a Non-executive Director of Iron Mountain Inc and Chair of
Launch Housing, a not-for-profit organisation. He was previously a Non-executive Director
of Recall Holdings Limited (to May 2016) and Chair and a Non-executive Director of Virgin
Australia Holdings Limited (to May 2015).
Neil previously served as Executive Director and the CFO of Toll Holdings (from 1997 to
2008).
As at the date of this report, Neil holds interests in 62,328 stapled securities.
Robert Edgar
BEc (Hons), PhD, FAICD
Independent Non-executive Director
Director since 21 July 2009.
Chair of the Remuneration and Human Resources Committee and a member of the Audit
and Risk Committee and the Nomination Committee.
Bob has over 30 years’ experience as a senior executive, with 25 years at ANZ Banking
Group in various senior roles, including Deputy CEO, Senior Managing Director, COO, and
Chief Economist.
Bob is currently a Non-executive Director of Djerriwarrh Investments Limited and Linfox
Armaguard Pty Limited. He is Chair of the Hudson Institute of Medical Research. Bob was
previously Chair and a Non-executive Director of Federation Centres (to June 2015), and a
Non-executive Director of Asciano Limited (to August 2016).
As at the date of this report, Bob holds interests in 32,009 stapled securities.
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Directors (continued)
Samantha Mostyn
BA, LLB
Independent Non-executive Director
Director since 8 December 2010.
Member of the Remuneration and Human Resources Committee and the Nomination
Committee.
Sam has significant experience in the Australian corporate sector both in Executive and
Non-executive capacities, in particular in the areas of human resources, corporate and
government affairs, sustainability management and diversity.
Sam is currently Chair and a Non-executive Director of Citigroup Pty Limited and a Non-
executive Director of Virgin Australia Holdings Limited, and the Mirvac Group. She is also a
Director of the Sydney Swans Football Club, President of the Australian Council for
International Development and Chair of Carriageworks. She was previously a Non-
executive Director of Cover-More Group Limited (to April 2017).
Sam is currently Deputy Chair of the Diversity Council of Australia, and is a member of the
NSW Climate Change Council, the advisory boards of ClimateWorks Australia, the
Crawford School of Government and Economics, Australian National University and
Commissioner of the Business and Sustainable Development Commission.
As at the date of this report, Sam holds interests in 18,215 stapled securities.
Christine O'Reilly
BBus
Independent Non-executive Director
Director since 12 April 2012.
Member of the Audit and Risk Committee and the Nomination Committee.
Christine has over 30 years’ experience in the finance and infrastructure sectors in various
roles including as Co-Head of Unlisted Infrastructure at Colonial First State Global Asset
Management and as CEO of the GasNet Australia Group.
Christine is currently a Non-executive Director of CSL Limited, Energy Australia Holdings
Pty Limited, and Medibank Private Limited. She is also a Non-executive Director of Baker
Heart and Diabetes Institute.
As at the date of this report, Christine holds interests in 20,406 stapled securities.
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2017 Transurban Annual Report
Directors (continued)
Rodney Slater
J.D., BS
Independent Non-executive Director
Director since 22 June 2009.
Member of the Nomination Committee.
Rodney is a partner in the Government Relations and Lobbying, Transportation,
Infrastructure and Local Government, and Construction Project groups of Washington, DC
firm Squire Patton Boggs where he has been a leader of its transportation practice since
2001. He previously served as US Secretary of Transportation (from 1997 to 2001) and
was the Administrator of the Federal Highway Administration (1993 to 1996).
In the USA, Rodney’s current directorships include Kansas City Southern (Railroads),
Verizon Communications Inc. and Southern Development Bancorporation. He was
previously a Director of Parsons Brinckerhoff, Delta Airlines, Northwest Airlines, WS Atkins
plc and ICx Technologies Inc. Rodney is a Director of the Congressional Awards
Foundation and United Way Worldwide.
As at the date of this report, Rodney holds interest in 3,000 stapled securities.
Peter Scott
BE (Hons), M.Eng.Sc, Hon FIEAust, MICE
Independent Non-executive Director
Director since 1 March 2016.
Member of the Audit and Risk Committee and the Nomination Committee.
Peter has over 20 years’ senior business experience in publicly listed companies and
considerable breadth of expertise in the engineering and finance sectors. He was formally
the CEO of MLC and Head of National Australia Bank’s Wealth Management Division, and
held a number of senior positions with Lend Lease.
His pro-bono activities include being Chair of Igniting Change Limited, a not-for-profit
organisation, a member of the Prime Minister’s Community Business Partnership, and a
Fellow of the Senate of the University of Sydney. He was previously Chair and a Non-
executive Director of Perpetual Equity Investment Company Limited (to June 2017) and
Perpetual Limited (to May 2017) and a Non-executive Director of Stockland Corporation
Limited (to August 2016).
As at the date of this report, Peter holds interests in 20,870 stapled securities.
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2017 Transurban Annual Report
Directors (continued)
Jane Wilson
MBBS, MBA, FAICD
Independent Non-executive Director
Director since 1 January 2017.
Member of the Remuneration and Human Resources Committee and the Nomination
Committee.
Jane has over 20 years’ experience as a Director of companies, Government-owned
corporations and not-for-profit organisations. She has considerable experience in finance,
banking and medicine.
Jane is a Guardian of the Future Fund, Australia’s Sovereign Wealth Fund, and a Non-
executive Director of Sonic Healthcare Limited. She is also a Non-executive Director of Opal
Aged Care Limited and the General Sir John Monash Foundation. She was previously
Deputy Chancellor of the University of Queensland and a Director of the Winston Churchill
Memorial Trust.
Jane was awarded the 2016 Australian Institute of Company Directors Queensland Gold
Medal Award for contribution to business and the wider community.
As at the date of this report, Jane holds interests in 4,000 stapled securities.
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2017 Transurban Annual Report
2017 Remuneration report (audited)
Introduction
The Transurban Board is pleased to present the Remuneration Report (‘Report’) for the Transurban Group
(‘Transurban’ or the ‘Group’) for the year ended 30 June 2017 (‘FY17’), prepared in accordance with the
Corporations Act 2001 (Cth) and the Corporations Regulations 2001 (Cth). This Report contains detailed
information regarding the remuneration arrangements for the Directors and senior executives who were key
management personnel (‘KMP’) of the Group during FY17.
Key Management Personnel
The following table lists the Group’s KMP during FY17.
Non-executive Directors
Lindsay Maxsted, Chair
Neil Chatfield
Robert Edgar
Samantha Mostyn
Christine O'Reilly
Peter Scott
Rodney Slater
Jane Wilson (from 1 January 2017)
Current senior executives
Scott Charlton, Executive Director and Chief Executive Officer (‘CEO’)
Tony Adams, Group General Manager, Project Delivery and Operational Excellence
Jennifer Aument, Group General Manager, North America
Wesley Ballantine, Group General Manager, Queensland
Andrew Head, Group General Manager, New South Wales
Michele Huey, Group General Manager, Strategy
Sue Johnson, Group General Manager, Customer Operations and Human Resources
Lisa Tobin, Group General Manager, Technology
Vin Vassallo, Group General Manager, Victoria
Adam Watson, Chief Financial Officer
Contents
Section
1. Remuneration snapshot
2. Changes to KMP
3. Remuneration governance
4. Senior executive remuneration policy and structure
5. Group performance, security holder wealth and remuneration
6. Senior executive remuneration outcomes for FY17
7. Service agreements
8. Non-executive Director remuneration
9. Statutory tables
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25
26
32
33
36
36
38
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Remuneration report (continued)
1. Remuneration snapshot
The Board is committed to an executive remuneration framework that is focused on driving a performance culture and
linking pay to the achievement of the Group’s strategy and business objectives that in turn drive long-term security
holder value.
Transurban’s remuneration framework is reviewed annually taking into consideration security holder and other
stakeholder feedback, market expectations and regulatory developments.
At the 2016 Annual General meeting (‘AGM’), the remuneration framework received strong support from security
holders, with a 97.14% vote in favour of the resolution to adopt the 2016 Remuneration Report (2015: 99.52%).
The Board considers that the current remuneration framework offers a range of mechanisms to balance sensible risk
management and motivate executives to deliver outstanding results.
Transurban’s core strategy is to partner with Governments to provide effective and innovative urban road
infrastructure. Consistent with this strategy, the Group has significantly expanded its portfolio with acquisitions and
development projects in Australia and the USA, leveraging its urban networks and partnering with Governments to
develop transport solutions in our core markets of the east coast of Australia and North America. These activities
have helped deliver against the Group’s stated objective of growing distributions for security holders.
The remuneration outcomes this year reflect Transurban’s strong financial results and achievements across the
Group’s operational and development activities. These results are outlined in more detail in the Operating and
Financial Review within the Directors’ Report.
Key measures of the results achieved in FY17 included:
§ 10.1% increase in underlying proportional EBITDA;
§ 27.4% increase in free cash flow per security; and
§ 13.2% increase in distributions paid to security holders.
These results have been achieved during a period of significant development activity for the business, reflected in the
substantial development pipeline which includes major enhancement projects across all markets. This contributed to
an 11.1% increase in proportional net costs (excluding significant items) to support strategic growth and development
projects and underlying business activity.
The Board and the Remuneration and Human Resources Committee believe that the remuneration outcomes reflect
alignment between rewarding senior executive efforts in meeting or exceeding key targets and recognising security
holder outcomes.
2. Changes to KMP
On 1 July 2017, Henry Byrne was appointed to the newly created role of Group General Manager, Corporate Affairs.
Henry has been an employee of the Group since September 2007, with his most recent role being General Manager
Investor Relations and Corporate Affairs. Henry’s remuneration package will be included in the 2018 Report.
Also effective 1 July 2017 were three temporary changes to the responsibilities of KMP as detailed below. It is
expected that these new roles will remain in effect until 30 June 2018. Remuneration packages will be included in the
2018 Report.
Group General Manager, NSW – Development
Andrew Head (formerly Group General Manager, NSW) has been seconded to the role of Group General Manager,
NSW – Development. This role is focused on potential development opportunities within the New South Wales
market.
Group General Manager, NSW Business Operations
Michele Huey (formerly Group General Manager, Strategy) has been seconded to the role of Group General
Manager, NSW Business Operations to manage the operations within the New South Wales business.
Group General Manager, Queensland and Group Strategy
Wes Ballantine (formerly Group General Manager, Queensland) has been seconded to the role of Group General
Manager, Queensland and Group Strategy. Wes’ former role has been expanded to incorporate the leadership of the
Group’s Strategy function.
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2017 Transurban Annual Report
Remuneration report (continued)
3. Remuneration governance
A. Board and Remuneration and Human Resources Committee responsibilities
The Remuneration and Human Resources Committee assists the Board in fulfilling its responsibilities relating to the
remuneration of Non-executive Directors, the remuneration of, and incentives for, the CEO and other senior
executives, remuneration budgets for all employees and remuneration practices, strategies and disclosures generally.
It is critical that the Remuneration and Human Resources Committee is independent of management when making
decisions affecting employee remuneration. Accordingly, the Committee comprises Non-executive Directors, all of
whom are independent. Where appropriate, the CEO and the Group General Manager, Customer Operations and
Human Resources attend Committee meetings, however they do not participate in formal decision making.
The members of the Committee are Robert Edgar (Chair), Samantha Mostyn, Neil Chatfield, and Jane Wilson (from
23 May 2017). Further details regarding the Committee are set out in the Directors’ Report.
B. Use of remuneration consultants
The Remuneration and Human Resources Committee may seek and consider advice from independent remuneration
consultants where appropriate. Any advice from consultants is used to guide the Committee and the Board, but does
not serve as a substitute for thorough consideration by Non-executive Directors.
The Group has a protocol in place governing the appointment of remuneration consultants and the manner in which
any recommendations made by those consultants concerning the remuneration of KMP are to be provided to the
Group, and in particular, the circumstances in which management may be given access to those recommendations.
The purpose of the protocol is to ensure that any remuneration recommendations provided by consultants are
provided without undue influence by KMP.
During FY17, consultants did not provide the Remuneration and Human Resources Committee with remuneration
recommendations relating to KMP. Benchmark data only was provided to the Committee.
C. Dealing in securities
In accordance with the Group’s Dealing in Securities Policy, employees who have awards under a Group equity plan
may not hedge against those awards. In addition, senior executives may not hedge against entitlements that have
vested but remain subject to a holding lock. Directors and employees are also prohibited from entering into margin
lending arrangements using Transurban stapled securities as security.
D. Minimum security holding
The Board has endorsed minimum security holding guidelines for Non-executive Directors, the CEO and other senior
executives. The guidelines recommend that all participants build and maintain a minimum security holding of
Transurban stapled securities equal in value to their fixed annual remuneration (excluding superannuation). The
minimum stapled security holding can be accumulated over a five year period.
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2017 Transurban Annual Report
Remuneration report (continued)
Remuneration report (continued)
4. Senior executive remuneration policy and structure
4. Senior executive remuneration policy and structure
The Group’s executive remuneration strategy is designed to attract, retain and motivate a highly qualified and
The Group’s executive remuneration strategy is designed to attract, retain and motivate a highly qualified and
experienced management team with the necessary skills and attributes to lead the Group in achieving its business
experienced management team with the necessary skills and attributes to lead the Group in achieving its business
objectives. The strategy also aims to encourage management to strive for superior performance by rewarding the
objectives. The strategy also aims to encourage management to strive for superior performance by rewarding the
achievement of targets that are challenging, clearly understood, and within the control of individuals to achieve
achievement of targets that are challenging, clearly understood, and within the control of individuals to achieve
through their own success.
through their own success.
A. Remuneration framework
A. Remuneration framework
The Group’s remuneration framework provides a combination of incentives intended to drive performance against the
Group’s short and longer term objectives. The framework for the CEO and other senior executives comprises three
components:
The Group’s remuneration framework provides a combination of incentives intended to drive performance against the
Group’s short and longer term objectives. The framework for the CEO and other senior executives comprises three
components:
§ Total Employment Cost (‘TEC’): fixed remuneration component comprising salary, superannuation and other
§ Total Employment Cost (‘TEC’): fixed remuneration component comprising salary, superannuation and other
prescribed benefits;
prescribed benefits;
§ Short Term Incentive (‘STI’): an ‘at risk’ component, awarded on performance over a 12 month period against
§ Short Term Incentive (‘STI’): an ‘at risk’ component, awarded on performance over a 12 month period against
pre-determined individual and Group performance measures that comprises both a cash component and a
pre-determined individual and Group performance measures that comprises both a cash component and a
component deferred into equity; and
component deferred into equity; and
§ Long Term Incentive (‘LTI'): an ‘at risk’ equity component, awarded on the achievement of pre-determined
§ Long Term Incentive (‘LTI'): an ‘at risk’ equity component, awarded on the achievement of pre-determined
internal and external performance measures over a three year period.
internal and external performance measures over a three year period.
B. Remuneration mix
B. Remuneration mix
A significant proportion of senior executive remuneration is ‘at risk’ to provide alignment with the interests of security
holders and to drive performance. The remuneration mix is designed to achieve a balanced reward for achievement
of immediate objectives and the creation of long term sustainable value. The remuneration mix for target performance
(100% vesting of STI and LTI Plans) for senior executives is outlined in the diagram below.
A significant proportion of senior executive remuneration is ‘at risk’ to provide alignment with the interests of security
holders and to drive performance. The remuneration mix is designed to achieve a balanced reward for achievement
of immediate objectives and the creation of long term sustainable value. The remuneration mix for target performance
(100% vesting of STI and LTI Plans) for senior executives is outlined in the diagram below.
CEO target remuneration mix
CEO target remuneration mix
Senior executive target remuneration mix
Senior executive target remuneration mix
34%
34%
33%
33%
16.5%
16.5%
16.5%
16.5%
Fixed annual remuneration
Fixed annual remuneration
25%
25%
15%
15%
15%
15%
45%
45%
Variable STI - cash
Variable STI - cash
Variable STI - deferred
Variable STI - deferred
Variable LTI
Variable LTI
Changes to CEO remuneration package
Changes to CEO remuneration package
As disclosed in last year’s report, the CEO’s remuneration package for FY17 was revised to better align total
As disclosed in last year’s report, the CEO’s remuneration package for FY17 was revised to better align total
remuneration to the market comparator group, including through a more appropriate weighting for each remuneration
remuneration to the market comparator group, including through a more appropriate weighting for each remuneration
component.
component.
C. Fixed total employment cost (‘TEC’)
C. Fixed total employment cost (‘TEC’)
Fixed TEC is set with reference to the market median, using the ASX 10-30 as the primary reference. Remuneration
Fixed TEC is set with reference to the market median, using the ASX 10-30 as the primary reference. Remuneration
packages (including TEC levels) are reviewed annually by the Remuneration and Human Resources Committee
packages (including TEC levels) are reviewed annually by the Remuneration and Human Resources Committee
taking into consideration an individual's role, experience and performance, as well as relevant comparative market
taking into consideration an individual's role, experience and performance, as well as relevant comparative market
data provided by remuneration consultants. TEC levels are also reviewed on a change in role.
data provided by remuneration consultants. TEC levels are also reviewed on a change in role.
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Remuneration report (continued)
D. Short term incentive (‘STI’)
Description
Eligible permanent Group employees, including the CEO and other senior executives, participate in the
annual STI plan, which puts a proportion of remuneration 'at risk' subject to meeting specific pre-
determined Group and individual performance measures linked to Group objectives.
Performance
Period
The performance period is the financial year preceding the payment date (i.e. 1 July 2016 – 30 June
2017).
Opportunity
For ‘at-target’ performance, the CEO has the opportunity to receive 100% of TEC and all other senior
executives have the opportunity to receive 67% of TEC. The minimum STI an individual can receive is
0% (if targets are not met) and the maximum is 150% of the STI opportunity, which is only awarded for
exceptional performance.
Payment and
deferral
The awarded STI for the CEO and other senior executives is settled 50% in cash and 50% is deferred.
For Australian employees, the deferred component is Transurban stapled securities, which are held on
trust for two years following the performance period and are restricted from trading until vesting. USA
employees were awarded deferred cash awards in FY17 and in prior years. Commencing 1 July 2017,
STI deferred components awarded to USA employees will also be deferred into Transurban stapled
securities with the same trading restrictions as Australian employees. The deferred securities and
deferred cash awards participate in dividends and/or distributions paid.
The number of securities or awards is determined by dividing the amount to be deferred by a 20 day
Volume Weighted Average Price (VWAP) of securities up to and including the last business day of the
performance period.
Performance
measures
Performance measures are a mix of Group and individual measures. The diagram below illustrates the
weighting of the two performance measures.
Individual KPIs are unique to the individual’s area of accountability. Individuals have a clear line of
sight to KPIs and are able to directly affect outcomes through their own actions.
The total STI performance outcome is calculated: (Individual STI Outcome % + (Individual STI
Outcome % x Group Outcome %)) ÷ 2.
Why are these
performance
measures used
Proportional EBITDA is one of the primary measures the Board uses to assess the operating
performance of the Group. It reflects the contribution from individual assets to the Group's operating
performance and focuses on elements of the result that management can influence to drive
improvements in short term earnings. The Board believes proportional EBITDA provides a better
reflection of the underlying performance of the Group’s assets than statutory EBITDA.
Proportional Net Costs reflects management’s ability to influence the expenditure of the business.
Strong cost management throughout the business drives an increase in proportional EBITDA and free
cash flow and ultimately security holder value.
The HSE measures focus on improving the Group’s HSE culture and reducing workplace injuries for
employees and contractors, as well as customer safety.
How is the
annual pool
determined
The Board approves a total STI pool to be distributed. One half of the pool represents the individual
component of the STI (capped at 100%) and the second half of the pool represents the individual
component of the STI, multiplied by the Group’s performance outcome to represent the Group’s
performance component (capped at 150%). The Board has discretion as to the proportion of the pool
that will be distributed each year.
Vesting
Performance against Group measures is assessed by the Board and the results of key elements are
independently validated. The Board confirms final outcomes for individual and Group performance and
has discretion to adjust the performance conditions and outcomes.
2017 Transurban Annual Report
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Remuneration report (continued)
Payment of STI The payment of the cash component and the allocation of deferred securities will occur in August 2017
following finalisation and approval of the Group’s audited results and the Board’s approval of individual
outcomes.
Cessation of
employment
If employment ceases before performance is assessed, generally there is no entitlement to receive any
STI award. Any unvested deferred securities will lapse, unless the plan rules provide otherwise or the
Board otherwise resolves.
Clawback
Fraudulent or dishonest behaviour will result in the forfeiture or clawback of any unvested awards.
Further, at the discretion of the Board, awards are subject 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.
STI Group performance measures in detail
Group
Measure
Proportional
EBITDA
(EBITDA:
earnings before
interest, taxes,
depreciation
and
amortisation)
Weighting Description of Measure
20%
Targets: the target for 100% vesting for FY17 was $1,605 million with straight line
vesting between the minimum target of 50% vesting of $1,573 million and 150% vesting
of $1,637 million.
To determine the targets for the Proportional EBITDA measure of the STI program,
the Board utilises the annual budget as the primary input. The budget incorporates
base business growth derived from network-wide traffic performance, price growth
and impacts of inflation and adjusts for events such as: construction and project
completion and the impact of acquisitions. When approving the budget, the Board
ensures that sufficient stretch is incorporated. This is achieved through the analysis of
the core assumptions underpinning the budget and also through consideration of the
quantifiable risks and opportunities that can influence the Group’s financial
performance. The budget incorporates directly controllable initiatives including road
safety, lane availability, operational efficiencies and the impact of development
activity. Once the budget has been finalised, the Board determines the STI targets.
The FY17 STI targets excluded Transurban Queensland integration costs and a
budget for discretionary research and development initiatives.
The targets use a constant currency for operations within the USA1.
Definition: Proportional EBITDA is the aggregation of EBITDA from each asset
multiplied by the Group's percentage ownership, as well as any contribution from Group
functions. Proportional EBITDA figures used to assess performance are included in note
B4 of the audited financial statements.
Proportional
Net Costs
20%
Targets: the target for 100% vesting for FY17 was $375 million with straight line vesting
between the minimum target of 50% vesting of $394 million and 150% vesting of $356
million.
To determine the targets for the Proportional Net Cost measure of the STI program, the
Board utilises the annual budget as the primary input. When approving the budget, the
Board ensures that sufficient stretch is incorporated. This is achieved through the
analysis of the core assumptions underpinning the budget and also through
consideration of the quantifiable risks and opportunities that can influence the Group’s
financial performance. Once the budget has been finalised, the Board determines the
STI targets. The FY17 STI targets excluded Transurban Queensland integration costs
and a budget for discretionary research and development initiatives.
The targets use a constant currency for operations within the USA1.
Definition: Proportional Net Costs are calculated as total costs less fee and other
revenues. This measure encourages and allows management to incur additional costs
where these are justified by increased revenue results.
1. Calculated by translating the monthly budgeted results for the USA business (Greater Washington Area) at the monthly spot rate used to translate
the reported monthly results.
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2017 Transurban Annual Report
Remuneration report (continued)
Health, Safety
and
Environment
(‘HSE’)
10%
The HSE KPI target was a combination of a lead indicator (leaders recording proactive
HSE events) and four lag indicators. The diagram below illustrates the performance
measures within the lag indicators. Targets were set with straight line vesting between
0% and 150%.
Targets: the targets for the lag indicators for 100% vesting for FY17 were as follows:
§ Recordable Injury Frequency Rate – zero for employees and 6.38 for contractors
(10% reduction on FY16 outcome);
§ Road Injury Crash Index – 4.16 (9% reduction over three years commencing FY14
outcome);
§ Road Safety Action Plans – All four Regional Road Safety Actions Plans in place and
actions tracking to target; and
§
Incident close out rate – All incidents with an actual consequence rating of
moderate and above, all near misses with a potential consequence rating of
moderate and above and all recordable incidents where Transurban has control.
Incidents are to be investigated and investigations closed out within three days of
investigation due date. The FY17 target was 75% of incidents closed within three
days of investigation due date.
Individual KPIs
50%
Individual KPIs related to critical business measures and are not disclosed due to the
commercially sensitive nature of these targets.
E. Long term incentive (‘LTI’)
Description
Participation in the LTI plan is offered to the CEO and other senior executives, and a very limited
number of other employees nominated by the CEO and approved by the Board.
Grants are made in the form of performance awards at no cost to the recipient. Each performance
award is an entitlement to receive a Transurban stapled security, or an equivalent cash payment, on
terms and conditions determined by the Board, subject to the achievement of vesting conditions.
Performance
Period
Opportunity
The three financial years commencing on 1 July in the year the grant is made.
The CEO’s opportunity is 103% of TEC and the opportunity for all other senior executives is 56% of
TEC. Upon vesting of a LTI plan, the minimum vesting outcome an individual can receive is 0% of the
awards due to vest (if the performance measures are not achieved) and the maximum vesting outcome
an individual can receive is 100% of the awards due to vest.
Performance
measures
Two performance measures are used to determine the number of awards that will vest at the end of
the performance period; relative Total Shareholder Return (‘TSR’) against a bespoke comparator
group and Free Cash Flow (‘FCF’) (each with a 50% weighting).
Why are these
performance
measures used
TSR is a relative, external, market-based performance measure against those companies with which
the Group competes for capital. It provides a direct link between executive reward and security holder
return. TSR measures total return on investment of a security, taking into account both capital
appreciation and distributed and/or dividend income which was reinvested on a pre-tax basis.
Growth in FCF per security reflects the Group’s continued focus on the maximisation of free cash. The
Group seeks to consistently grow its distributions year on year and to align security holder distributions
with FCF per security.
2017 Transurban Annual Report
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Remuneration report (continued)
Allocation
TSR component: An independently determined fair value allocation valuation is applied to this
component of the LTI.
FCF component: An independently determined face value allocation valuation (discounted for
distributions and/or dividends foregone throughout the performance period) is applied to this component
of the LTI.
The Board regularly considers the most appropriate measures for the Group and believes that fair value
is the correct measure for the TSR component of the LTI awards as it is a market based measure and
the inclusion of market forces within the calculation is appropriate. Whereas the non-market based
performance measure of FCF is more suited to a face value valuation when allocating LTI awards.
Vesting
TSR component
The Group uses an independent report that sets out the Group's TSR growth and that of each company
in the bespoke comparator group. A VWAP of securities for the 20 trading days up to and including the
testing date is used to calculate TSR.
The level of TSR growth achieved by the Group is given a percentile ranking having regard to the
Group’s performance compared to the performance of other companies in the comparator group (the
highest ranking company is ranked at the 100th percentile). This ranking determines the extent to which
performance awards, subject to this target, vest.
FCF component
The Group's FCF per security percentage growth rate is calculated based on the FCF per security over
the three year performance period.
The Board determines in its absolute discretion whether the performance awards are settled in
Transurban stapled securities or a cash payment of equivalent value. In FY17 and prior years, USA
employees have received cash payments upon vesting. Commencing 1 July 2017, all LTI plan offers
made to USA employees will be under the same conditions as Australian employees in that the Board
in its absolute discretion will determine whether awards are settled in Transurban stapled securities or
in cash.
Following testing, any awards that do not vest, lapse and any awards that vest are automatically
exercised.
Cessation of
employment
If employment ceases before the performance measures are tested, generally there is no entitlement to
unvested performance awards. Any unvested awards will lapse, unless the plan rules provide otherwise
or the Board otherwise resolves.
Clawback
Fraudulent or dishonest behaviour will result in the forfeiture or clawback of any unvested awards.
Further, at the discretion of the Board, awards are subject 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.
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2017 Transurban Annual Report
Remuneration report (continued)
LTI performance measures in detail
Group
Measure
Relative
TSR
Weighting Description of measure
50%
Relative TSR is measured against a bespoke comparator group comprising companies in the
transport, utilities, real estate, construction and infrastructure Global industry classification
standards (‘GICS’) sectors of the ASX150. The 33 companies in this group for grants made during
FY17 were:
Abacus Property Group, AGL Energy Limited, APA Group, Aurizon Holdings Limited, Ausnet
Services Limited, Aveo Group, BWP Trust, Charter Hall Group, Charter Hall Retail REIT Unit,
Cromwell Property Group, Dexus Property Group, DUET Group, Goodman Group, GPT Group,
Growthpoint Properties Australia, Investa Office Fund, Lend Lease Group, Macquarie Atlas Roads
Group, Mirvac Group, Qantas Airways Limited, Qube Holdings Limited, Scentre Group, Shopping
Centres Australasia Property Group, Spark Infrastructure Group, Spark New Zealand Limited,
Stockland, Sydney Airport, Telstra Corporation Limited, TPG Telecom Limited, Transurban Group,
Vicinity Centres, Vocus Communications Limited, Westfield Corporation.
The table below shows the differences between the FY17 TSR comparator group and the TSR
comparator group for the prior year.
Companies new to the group in FY17
Companies excluded in FY17
Vicinity Centres (previously known as Federation
Centres), Vocus Communications Limited
(previously ranked outside the ASX150).
Asciano (delisted), CIMIC (Board approved
exclusion), iiNET Limited (delisted), Federation
Centres (now known as Vicinity Centres),
M2 Group (delisted).
The TSR component of performance awards granted during FY17, 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
At or below the 50th percentile
Zero
Above the 50th percentile but below the 75th
percentile
Straight line vesting between 50 and 100
At or above the 75th percentile
100
Growth in
FCF per
security
50%
The FCF calculation is included in note B10 of the audited financial statements.
The FCF per security component of performance awards granted during FY17 will vest
based on the Group’s compound annual growth targets translated into annual FCF per
security over the three year performance period, as set out below:
% annual growth in FCF per security
(Distribution base of 45.5 cents per security)
Less than 9%
Between 9% and 12%
12% or more
% of performance awards that vest
Zero
Straight line vesting between 50 and 100
100
The Group seeks to consistently grow its distributions year on year and to align distributions with FCF per security.
The FCF per security may not grow each year in line with distributions. Factors that may cause FCF to fluctuate year
on year may include the timing of interest payments, movements in working capital, the impact of major development
projects and capital management initiatives. Due to possible fluctuations in FCF, the extent to which distributions are
covered by cash may also fluctuate between 90-110% in any given year. This is consistent with the Group’s
distribution policy of achieving approximately 100% free cash coverage over time. Due to possible fluctuations in
FCF, distributions are considered the best point of alignment with security holder expectations for growth in investor
returns. In delivering against this measure, the Board also balances the objective of growing distributions with longer
dated investments that generate value for the business but may not contribute to distribution growth in the near term.
The Group has a number of major projects in development through this period, including the CityLink-Tulla-Widening
in Melbourne, NorthConnex in Sydney, the Logan Enhancement Project in Brisbane as well as other potential
developments on each of our networks. The Board takes this into account when setting the range to ensure
appropriately challenging measures.
For performance awards granted during FY18, the performance target range for growth in FCF per security is
between 8% and 10% per annum. This is calculated using the FY17 distribution of 51.5 cents per security as the
base and excludes any impact on FCF per security that arises as a result of funding activity that may arise to support
the execution or delivery of potential major developments.
2017 Transurban Annual Report
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Remuneration report (continued)
5. Group performance, security holder wealth and remuneration
A. Financial highlights for FY17
The Group’s network portfolio delivered strong EBITDA growth, which was mainly caused by increased traffic across
our networks and disciplined cost control. The Group recorded proportional EBITDA excluding significant items of
$1,629 million for the financial year ended 30 June 2017, an underlying increase of 10.1% on the prior corresponding
period.
B. Overview of Group performance
The variable (or 'at risk') remuneration of the CEO and other senior executives is linked to the Group’s performance
through the use of measures based on the operating performance of the business. The graphs below show the
Group’s performance over the past five years including metrics used to determine components of STI and LTI
awards.
Financial measures
Underlying proportional EBITDA
($ millions)
2,000
1,500
1,000
828
934
1,629
1,480
1,289
Proportional net costs excluding
significant items ($ millions)
380
400
300
200
163
183
342
270
100
0
500
0
65
60
55
50
45
40
35
30
25
14
12
10
8
6
4
2
0
32
2013 2014 2015 2016 2017
2013
2014
2015
2016
2017
Free cash per Security (cents)
Distribution Paid per Security (cents)
59.6
46.8
40.2
33.9
30.1
51.5
45.5
40.0
35.0
31.0
55.0
50.0
45.0
40.0
35.0
30.0
25.0
20.0
2013 2014 2015 2016 2017
2013
2014
2015
2016
2017
Security price at year end ($)
11.99 11.85
9.30
6.76
7.39
Total shareholder return
performance (%)
35
32
25
17
4
40
30
20
10
0
2013
2014
2015
2016
2017
2013
2014
2015
2016
2017
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2017 Transurban Annual Report
Remuneration report (continued)
6. Senior executive remuneration outcomes for FY17
A. STI Outcomes for FY17
Group performance in respect of the proportional EBITDA, proportional Net Costs and HSE STI performance
measures for FY17 was assessed by the Board as 111.2% of the possible STI opportunity.
Measure
Proportional EBITDA1
Proportional net costs1
HSE
Overall Group Performance
Performance
Outcome
$1,643 million
150.0 %
$380 million
–
–
87.1 %
82.1 %
111.2 %
1. For FY17 Transurban Queensland integration costs and a budget for discretionary research and development initiatives were excluded from
the Proportional EBITDA and Proportional net costs targets and actual outcomes.
The Group achieved the following HSE outcomes which are linked to the Group’s STI awards.
Measure
Score Outcome % STI Outcome %
Leadership KPIs
Recordable Injury Frequency Rate (‘RIFR’)1 – employees
Recordable Injury Frequency Rate (‘RIFR’)1 – contractors
Road Injury Crash Index (‘RICI’)2
Road Safety Action Plans3
Incident close out rate4
Overall HSE Outcome
3.1
0.9
4.8
4.9
4 plans
76.6
81.0
58.3
150.0
–
100.0
103.2
48.6
4.4
11.3
–
7.5
10.3
82.1
1. RIFR: recordable injuries (fatalities, lost time and medical treatment injuries) per million work hours.
2. RICI: serious road injury (requiring medical treatment or where emergency medical care is required, other than first aid) crashes per 100 million
vehicle kilometres travelled.
3. Road Safety Plan actions implemented and actions tracking to target.
4. Percentage of incidents closed within three days of agreed investigation due date.
The individual STI performance outcomes and awards for the CEO and senior executives for FY17 are detailed
in the following table:
STI outcome (%)
STI awarded3 ($)
Current senior executives
Individual KPIs
S Charlton
T Adams
J Aument1
W Ballantine
A Head
M Huey
S Johnson
L Tobin
V Vassallo
A Watson
110.0
104.5
100.0
115.0
100.0
104.5
115.0
120.0
98.5
100.0
Total2
115.0
109.2
104.5
120.2
104.5
109.2
120.2
125.4
102.9
104.5
2,530,000
430,300
466,784
478,300
473,200
397,150
469,450
491,000
434,500
505,300
1. Jennifer Aument is remunerated in USA Dollars. Her awarded STI has been translated to Australian Dollars using the exchange rate at 30
June 2017.
2. The total STI performance outcome is calculated: (Individual STI Outcome % + (Individual STI Outcome % x Group Outcome %)) ÷ 2. The
Group’s percentage outcome is 111.2%. No STI was forfeited due to performance, however, due to a contractor fatality on the NorthConnex
project during FY17, senior executives have forfeited their STI entitlement associated with the RIFR Contractor outcome, resulting in a
reduction to the Group result from 111.2% to 109.0% for senior executives.
3. 50% is paid in cash and 50% is deferred for two years following the performance year.
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2017 Transurban Annual Report
Remuneration report (continued)
Number of STI deferred securities and cash awards granted in FY17
Current senior executives
S Charlton
T Adams
J Aument
W Ballantine
A Head
M Huey
S Johnson
L Tobin
V Vassallo
A Watson
Balance
at start
of year
Granted
during year as
remuneration
Matured
and paid
during year
Forfeited
during
the year
Balance
at the end
of year
255,135
100,843
137,209
42,799
48,513
51,681
69,329
7,398
38,993
46,755
56,782
12,847
18,021
24,179
23,353
18,790
18,146
17,867
15,860
25,476
19,041
22,224
21,440
27,359
38,816
–
18,061
23,062
30,139
–
–
–
–
–
–
–
–
–
–
–
218,769
38,596
51,252
47,675
49,303
25,544
38,799
39,553
52,119
31,888
B. LTI Outcomes for FY17
Eligible senior executives (excluding the CEO) received performance awards with a grant date of 15 August 2016.
Following the receipt of security holder approval at the 2016 AGM, the CEO received performance awards with a
grant date of 24 October 2016. All performance awards granted in FY17 may vest subject to a performance period
from 1 July 2016 through to 30 June 2019.
The relevant values of the grants are as follows:
Recipient
Grant date
Value of awards
at grant date
Closing security
price at grant date
Eligible senior executives
15 August 2016
CEO
24 October 2016
1. Fair value in accordance with AASB 2 treatment of market conditions.
Performance awards granted in FY17
Relative
TSR1
FCF per
security
$5.24
$4.42
$10.71
$9.50
$11.93
$10.63
The table below shows the number of LTI awards granted to senior executives during FY17.
Current senior executives
($)
Number of
performance
awards granted
Potential value of
grant yet to vest at
Target ($)
Maximum (Face value)
of potential value
of grant to vest ($)
S Charlton
T Adams
J Aument
W Ballantine
A Head
M Huey
S Johnson
L Tobin
V Vassallo
A Watson
34
298,267
1,855,760
3,170,578
311,221
363,738
314,337
357,655
287,249
308,519
309,229
333,397
381,913
517,010
604,255
522,188
594,150
477,188
512,525
513,706
553,850
634,449
43,337
50,650
43,771
49,803
39,999
42,961
43,060
46,425
53,181
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2017 Transurban Annual Report
Remuneration report (continued)
The target (100%) value of the grant has been estimated based on the award valuations at grant date (a fair value
approach for the TSR component and a face value approach discounted for distributions/and or dividends for the FCF
component). The fair value for TSR considers the probability that the senior executive may not derive value from the
LTI award, along with other factors, including difficulty of achieving performance hurdles and anticipated security
price volatility.
The maximum LTI opportunity for each senior executive is the face value of the award (i.e. the value the senior
executive would receive if all their performance awards vested, based on Transurban’s security price at the time the
award was granted).
The minimum total value of the grant, if the applicable performance measures are not met, is zero.
Value of performance awards vested and lapsed in FY17
The FY14 LTI plan vested on 17 August 2016 (performance period 1 July 2013 to 30 June 2016).
The outcome of the performance tests were as follows:
Test type
Result of test
% of units vest
TSR
Transurban ranked 7th highest out of 35 companies (82.3%)
Free C Free Cash Flow
120.9 cents adjusted to 125.0 cents (Refer to the explanation below)
(100% vesting target was 120.2 cents)
Overall vesting
100%
100%
100%
The favourable FCF vesting outcome was influenced by stronger than expected traffic and revenue growth in the
GWA region, lower traffic disruption on CityLink from the works associated with the CityLink Tulla Widening project
and lower financing costs.
Senior Executive
Awards vested
Value ($)1
S Charlton
J Aument2
W Ballantine
A Head
S Johnson
L Tobin
V Vassallo
382,292
1,713,466
74,494
62,630
94,767
62,630
79,980
79,980
334,159
280,940
425,098
280,940
358,768
358,768
1. Based on the fair value at date of grant.
2. Jennifer Aument awards are settled in cash.
Free Cash Flow Adjustment
Financial close of the Transurban Queensland (‘TQ’) (formerly, Queensland Motorways) acquisition occurred in July
2015. The associated capital raising (the issue of 404.5 million new securities) occurred in May 2015. The timing of
these events (two different financial years) impacted the calculation of the FCF for FY14 and the FCF performance
calculation against the FCF targets for the three LTI plans on foot at that time (the FY12, FY13 and FY14 plans).
Consistent with the treatment of the FY12 LTI plan, as disclosed in the FY14 Remuneration Report, the Board
exercised its discretion to ensure that participants in the FY14 LTI plan were neither advantaged nor disadvantaged
as a result of the TQ acquisition and associated capital raising. The Board exercised its discretion to, in effect;
exclude the new securities issued from the number of securities used to calculate the FY14 FCF per security for the
purposes of calculating the FCF outcome for the FY14 LTI plan. Interest income on the equity raised prior to financial
close was similarly excluded from the calculation. The targets set at the beginning of the performance period (1 July
2012) were not adjusted.
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Remuneration report (continued)
Value of performance awards to vest and lapse in FY18
Initial vesting calculations indicate that 100% of awards on issue for the FY15 plan will vest for all remaining
participants.
7. Service agreements
The remuneration and other terms of employment for the CEO and other senior executives are formalised in service
agreements that have no specified term. Under these agreements, the CEO and other senior executives are eligible
to participate in STI and LTI plans. Some other key aspects of the agreements in place for FY17 are outlined below:
Period of notice to terminate
by the senior executive
Period of notice to terminate
by the Group1
CEO
Other senior executives
6 months
3 months
12 months
6 months
1. Payment in lieu of the notice period may be provided (based on the executive's fixed remuneration). The Group may also terminate at any time
without notice for serious misconduct.
8. Non-executive Director remuneration
A. Remuneration policy
The diagram below sets out the key objectives of the Group’s Non-executive Director remuneration policy and
how they are achieved through the Group’s remuneration framework:
Securing and retaining
talented, qualified Directors
Preserving independence
and impartiality
Aligning Director and
security holder interests
â
â
â
Director fee levels are set with
regards to: the responsibilities
and risks attached to the role, the
time commitment and workload
expected, the Director’s
experience and expertise, and
market benchmark data.
Director remuneration consists
of base (Director) fees and
Committee fees. No element of
Director remuneration is 'at risk'
(i.e. fees are not based on the
performance of the Group or
individual Directors from year to
year).
Directors are encouraged to
hold Transurban securities
and the Board has endorsed
minimum security holding
guidelines for Directors.
B. Remuneration arrangements
Maximum aggregate remuneration
The aggregate remuneration that may be paid to Non-executive Directors in any year is capped at a level
approved by security holders. At the 2016 AGM security holders approved an increase in the aggregate fee pool
to $3,000,000 (inclusive of superannuation contributions), with effect from 13 October 2016. No change to the
aggregate fee pool is proposed for FY18.
Non-executive Director fees for FY17
The Remuneration and Human Resources Committee regularly reviews Non-executive Director fees, and such
reviews include periodic benchmarking against other publicly listed entities of similar size and complexity to
Transurban.
A review of Non-executive Director fees (base Director and Committee fees) was undertaken during FY17. The
Remuneration and Human Resources Committee recommended, and the Board subsequently resolved, that
Non-executive Director fees remain unchanged for the 2017 calendar year.
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Remuneration report (continued)
Current Director and Committee fees are set out below:
Board Fees
Chair
Member
Committee Fees
Audit and Risk Committee
Chair
Member
Remuneration and Human Resources Committee
Chair
Member
Nomination Committee
$550,000
$185,000
$50,000
$25,000
$40,000
$20,000
$10,000
The Chair of the Board does not receive any additional fees for Committee responsibilities.
The Chair of each Committee only receives the Chair fee (and not a member fee).
Non-executive Directors are permitted to be paid additional fees for special duties or exertions. No such fees
were paid during FY17. Non-executive Directors are also entitled to be reimbursed for all business related
expenses, including travel, as may be incurred in the discharge of their duties.
Non-executive Directors are not entitled to any retirement benefits.
C. Non-executive Director related party information
All Non-executive Director related party relationships are based on normal commercial terms. None of the Non-
executive Directors were, or are, involved in any procurement or other Board decision-making regarding the
companies or firms with which they have an association.
The Group is not required to make the following disclosures but for transparency reasons notes the following
relationships and transactions:
Director
Related party
Services provided
R Slater
Mr Slater is a partner in the public policy
practice group of Squire Patton Boggs (US)
LLP (SPB).
Transurban used SPB during FY17 for various
lobbying activities in the USA, and incurred
US$289,296 for services during FY17.
L Maxsted
Mr Maxsted is Chair and a Non-executive
Director of Westpac Banking Corporation.
Westpac provides a number of banking
products and services to Transurban. Westpac
also participated in two financing arrangements
conducted by Transurban during FY17 and
acted as a Joint Lead Arranger on two others.
N Chatfield
Mr Chatfield is Chairman and a Non-executive
Director of Seek Limited.
Mr Chatfield is a Non-executive Director of
Iron Mountain Inc.
Seek provides employment advisory services to
Transurban.
Iron Mountain provides data protection services
to Transurban.
S Mostyn
Ms Mostyn is a Non-executive Director of
Citigroup Pty Ltd.
Ms Mostyn is a Non-executive Director of
Virgin Australia Holdings Limited.
C O’Reilly
Ms O’Reilly is a Non-executive Director of
Energy Australia.
Citigroup provides banking products and
services to Transurban. Citigroup also acted as
a Joint Lead Arranger and Lead Arranger on
two financing arrangements conducted by
Transurban during FY17.
Transurban uses air travel services provided by
Virgin Australia.
Energy Australia is one of Transurban’s
electricity providers in New South Wales and
Queensland.
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2017 Transurban Annual Report
T Adams
2017
2016
568,484
515,292
J Aument1
2017
2016
683,294
668,904
W Ballantine
2017
2016
574,384
530,692
Remuneration report (continued)
9. Statutory tables
A. Senior executive remuneration
Short-term employee benefits
Cash
salary
and fees
Cash
STI2
Non-
monetary
benefits3
Deferred
STI4
Post-
employment
benefits
Long-
term
benefits
Share based
benefits5
Total
Super-
annuation
Long
service
leave
Equity
awards
Cash
awards
Current CEO
S Charlton
2017
2016
2,180,384
2,102,392
1,265,000
1,193,475
10,575 1,182,642
13,024 1,120,400
19,616
19,308
52,382 1,893,205
8,463 1,821,975
–
–
6,603,804
6,279,037
Current other senior executives
215,150
213,275
61,218
1,983
209,700
191,142
19,616
19,308
18,876
10,052
323,949
214,874
–
–
1,416,993
1,165,926
233,392
286,157
1,371
1,459
300,554
361,400
14,322
14,521
–
–
–
–
701,351
992,155
1,934,284
2,324,596
239,150
276,375
4,937
2,034
264,067
228,708
19,616
19,308
19,887
10,353
325,986
313,368
A Head
2017
2016
M Huey
2017
2016
656,235
640,042
236,600
222,375
7,225
4,306
248,383
298,267
20,318
19,308
14,244
12,486
391,578
413,050
523,184
474,142
198,575
214,750
6,606
1,784
167,442
48,550
19,616
19,308
–
–
307,629
291,326
S Johnson
2017
2016
L Tobin
2017
2016
V Vassallo
2017
2016
A Watson
2017
2016
563,384
510,692
564,734
537,192
582,468
529,323
703,966
648,892
234,725
211,450
6,559
2,869
209,658
182,983
19,616
19,308
25,182
9,963
315,079
304,768
245,500
187,700
217,250
301,500
252,650
225,350
4,169
2,012
202,883
213,725
19,616
19,308
12,284
2,168
332,738
348,614
4,169
2,065
288,433
250,958
19,616
19,308
13,137
2,344
353,530
360,869
4,169
1,829
192,392
84,317
19,616
19,308
–
–
398,357
310,998
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,448,027
1,380,838
1,574,583
1,609,834
1,223,052
1,049,860
1,374,203
1,242,033
1,381,924
1,310,719
1,478,603
1,466,367
1,571,150
1,290,694
TOTAL
2017
7,600,517
3,337,992
110,998 3,266,154
191,568
155,992 4,642,051
701,351 20,006,623
2016
7,157,563
3,332,407
33,365 2,980,450
188,293
55,829 4,379,842
992,155 19,119,904
1. Jennifer Aument is remunerated in USA Dollars. The amounts shown in the table above have been converted to Australian Dollars using the
average exchange rate over the reporting period.
2. The amount represents the cash STI payment to the senior executive for FY17, which will be paid in August 2017.
3. Non-monetary benefits include Group employee insurance and relocation allowances (where applicable).
4. A component of STI award is deferred into securities. In accordance with accounting standards, the deferred component will be recognised over
the three year service period. The amount recognised in this table is the FY17 accounting charge for unvested grants.
5. In accordance with the requirements of the accounting standards, remuneration includes a proportion of the fair value of equity compensation
granted or outstanding during the year (i.e. performance awards under the LTI plan). The fair value of equity instruments is determined as at the
grant date and is progressively allocated over the performance period. The amount included as remuneration may be different to the benefit (if any)
that senior executives may ultimately realise should the equity instruments vest. The fair value of performance awards at the date of their grant has
been independently determined in accordance with accounting standards. The fair value of the performance awards has been valued applying a
Monte Carlo simulation (using a Black-Scholes framework) to model Transurban’s security price and where applicable, the TSR performance
against the comparator group performance.
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Remuneration report (continued)
B. Number of performance awards on issue as at 30 June 2017
Balance at
start of year
Granted
during year as
remuneration
Matured
and paid
during year
Lapsed
or forfeited
during year
Balance at
the end
of year
Current senior executives
S Charlton1
T Adams
J Aument
W Ballantine
A Head
M Huey2
S Johnson
L Tobin
V Vassallo
A Watson3
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
1,019,868
1,254,579
298,267
(382,292)
292,441
(527,152)
119,947
64,928
202,384
137,229
182,912
126,309
242,704
287,601
86,778
48,888
178,108
123,563
204,841
147,568
211,651
149,902
131,004
69,830
43,337
55,019
50,650
65,155
43,771
56,603
49,803
67,857
39,999
50,784
42,961
54,545
43,060
57,273
46,425
61,749
53,181
68,768
–
–
(74,494)
–
(62,630)
–
(94,767)
(112,754)
(12,894)
(12,894)
(62,630)
–
(79,980)
–
(79,980)
–
(7,594)
(7,594)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
935,843
1,019,868
163,284
119,947
178,540
202,384
164,053
182,912
197,740
242,704
113,883
86,778
158,439
178,108
167,921
204,841
178,096
211,651
176,591
131,004
1. Scott Charlton’s number of performance awards granted during FY13 included 236,256 performance awards granted in September 2012 as a sign-
on award, to vest, subject to his continued employment, in three equal tranches on the first, second and third anniversaries of his commencement
with the Group. The first tranche (78,752) awards vested on 16 July 2013, the second tranche (78,752) awards vested on 16 July 2014 and the
third and final tranche (78,752) awards vested on 16 July 2015.
2. Michele Huey received a pro-rated grant of performance awards in FY15 due to her commencement date of 19 January 2015. She also received a
one-off equity grant of 25,788 awards recognising the equity awards forfeited when she ceased employment with her former employer. The one-off
equity grant will vest, subject to continued employment, in two equal tranches on the first and second anniversaries of her commencement with the
Group. The first tranche (12,894) awards vested 19 January 2016 and the second tranche (12,894) awards vested 19 January 2017.
3. Adam Watson received a pro-rated grant of performance awards in FY15 due to his commencement date of 1 December 2014. He also received a
one-off equity grant of 15,188 awards recognising the equity awards forfeited when he ceased employment with his former employer. The one-off
equity grant will vest, subject to continued employment, in two equal tranches on the first and second anniversaries of his commencement with the
Group. The first tranche (7,594) awards vested 1 December 2015 and the second tranche (7,594) awards vested 1 December 2016.
39
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2017 Transurban Annual Report
Remuneration report (continued)
C. Securities held by senior executives as at 30 June 2017
Current senior executives
Balance at
start of year
Changes
during year
Balance at
end of year
S Charlton
T Adams
J Aument
W Ballantine
A Head
M Huey
S Johnson
L Tobin
V Vassallo
A Watson
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
910,353
213,374
9,368
5,090
–
–
3,684
5,794
76,584
75,661
12,894
–
47,844
30,099
9,576
–
18,671
11,557
8,307
–
168,816
696,979
6,926
4,278
–
–
74,989
(2,110)
(25,764)
923
12,894
12,894
32,847
17,745
54,424
9,576
110,644
7,114
7,594
8,307
1,079,169
910,353
16,294
9,368
–
–
78,673
3,684
50,820
76,584
25,788
12,894
80,691
47,844
64,000
9,576
129,315
18,671
15,901
8,307
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2017 Transurban Annual Report
Remuneration report (continued)
D. Remuneration paid to Non-executive Directors
Short-term benefits
Current Non-executive Directors
L Maxsted
N Chatfield
R Edgar
S Mostyn
C O'Reilly
P Scott
R Slater2
J Wilson
Total
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2017
2016
Fees
530,384
508,192
245,384
237,492
240,384
230,992
196,347
190,028
200,913
194,365
196,352
56,317
238,695
246,575
91,027
1,939,486
1,663,961
Post-employment benefits
Superannuation1
Total
19,616
19,308
19,616
19,308
19,616
19,308
18,653
18,053
19,087
18,465
18,460
5,144
–
–
8,648
123,696
99,586
550,000
527,500
265,000
256,800
260,000
250,300
215,000
208,081
220,000
212,830
214,812
61,461
238,695
246,575
99,675
2,063,182
1,763,547
1. Superannuation contributions made on behalf of Non-executive Directors to satisfy the Group’s obligations under applicable superannuation
guarantee legislation.
2. Rodney Slater is remunerated in USA Dollars. The amounts shown in the table above have been converted to Australian Dollars using the
average exchange rate over the reporting period.
E. Securities held by Non-executive Directors as at 30 June 2017
Current Non-executive Directors
L Maxsted
N Chatfield
R Edgar
S Mostyn
2017
2016
2017
2016
2017
2016
2017
2016
Balance at
start of year
Changes
during year
Balance at
end of year
70,258
66,559
59,728
55,424
32,009
30,324
18,215
17,256
–
3,699
2,600
4,304
–
1,685
–
959
70,258
70,258
62,328
59,728
32,009
32,009
18,215
18,215
C O’Reilly
20,406
20,406
2017
–
P Scott
R Slater
J Wilson1
2016
2017
2016
2017
2016
2017
19,332
20,000
–
3,000
–
–
1,074
870
20,000
–
3,000
4,000
1. Jane Wilson acquired 4,000 securities prior to her appointment as a Non-executive Director on 1 January 2017.
41
20,406
20,870
20,000
3,000
3,000
4,000
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2017 Transurban Annual Report
Auditor
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
Non-audit services
The Company has an "External Auditor Independence" policy which 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 external auditor will only provide a permissible non-audit service where there is a compelling reason for it to
do so.
All non-audit services must be pre-approved by the CFO (services less than $5,000) or the Chair of the Audit and
Risk Committee (in all other cases).
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 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 the auditor, as set out below, did not compromise the auditor independence
requirements of the Corporations Act 2001 for the following reasons:
§ the Audit and Risk Committee reviews the non-audit services to ensure they do not impact the impartiality and
objectivity of the auditor; and
§ none of the services undermine 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.
During the year the following fees were paid or payable for audit and non-audit services provided by the auditor of
THL, its related practices and non-related audit firms:
Amounts received or due and receivable by PricewaterhouseCoopers
Audit and other assurance services:
Audit and review of financial reports
Other assurance services
Other consulting services
Total remuneration for PricewaterhouseCoopers
Total auditors remuneration
Indemnification and insurance
2017
$
2016
$
2,237,470
725,730
2,963,200
–
2,963,200
2,963,200
2,190,000
444,300
2,634,300
–
2,634,300
2,634,300
Each officer (including each director) of the Group is indemnified, to the maximum extent permitted by law,
against any liabilities incurred as an officer of the Group pursuant to agreements with the Group. Each officer is
also indemnified against reasonable costs (whether legal or otherwise) incurred in relation to relevant proceedings
in which the officer is involved because the officer is or was an officer.
The Group has arranged to pay a premium for a Director’s and officer’s liability insurance policy to indemnify
Directors and officers in accordance with the terms and conditions of the policy.
This policy is subject to a confidentiality clause which prohibits disclosure of the nature of the liability covered, the
name of the insurer, the limit of liability and the premium paid for this policy.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is
set out on page 44.
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2017 Transurban Annual 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 report is made in accordance with a resolution of Directors.
Lindsay Maxsted
Director
Scott Charlton
Director
Melbourne
8 August 2017
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2017 Transurban Annual 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 2017, I declare that to the best of my
knowledge and belief, there have been:
Auditor’s Independence Declaration
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
As lead auditor for the audit of Transurban Holdings Limited, Transurban Holding Trust and
Transurban International Limited for the year ended 30 June 2017, I declare that to the best of my
(b)
knowledge and belief, there have been:
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
(a)
Transurban International Limited and the entities they controlled during the period.
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.
Chris Dodd
Partner
PricewaterhouseCoopers
Chris Dodd
Partner
PricewaterhouseCoopers
Melbourne
8 August 2017
Melbourne
8 August 2017
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.
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
44
44
Liability limited by a scheme approved under Professional Standards Legislation.
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2017 Transurban Annual Report
Transurban Holdings Limited ABN 86 098 143 429
Contents
Section A: Group financial statements
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Section B: Notes to the Group financial statements
Basis of
preparation and
significant
changes
B1
Corporate
information
Operating
performance
B4
Segment
information
B2
Summary of
significant
changes in the
current period
B5
Revenue
Security holder
outcomes
B9
Earnings per
stapled security
B10
Dividends/
distributions and
free cash
B3
Basis of
preparation
B6
Significant items
B7
Income tax
B8
Working capital
Capital and
borrowings
B11
Contributed equity
B12
Reserves
B13
Net finance costs
B14
Borrowings
B15
Derivatives and
financial risk
management
Network summary B16
Intangible assets
B17
Maintenance
provision
B18
Other liabilities –
concession and
promissory notes
Group structure
B19
Principles of
consolidation
B20
Material
subsidiaries
B21
Business
combinations
B22
Equity accounted
investments
B23
Non-controlling
interests – other
B24
Deed of cross and
intragroup
guarantees
Items not
recognised
B25
Contingencies
B26
Commitments
B27
Subsequent
events
Other
B28
Related party
transactions
B29
Key management
personnel
compensation
B30
Remuneration of
auditors
B31
Parent entity
disclosures
Section C: Transurban Holdings Trust (‘THT’) and Transurban International Limited (‘TIL’) financial statements
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Section D: Notes to the THT and TIL financial statements
Section E: Signed reports
Directors’ declaration
Independent auditor’s report to the stapled security holders
45
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2017 Transurban Annual Report
Section A: Group financial statements
Transurban Holdings Limited
for the year ended 30 June 2017
46
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2017 Transurban Annual Report
Transurban Holdings Limited
Consolidated statement of comprehensive income
for the year ended 30 June 2017
Revenue
Expenses
Employee benefits expense
Road operating costs
Construction costs
Transaction and integration costs
Corporate and other expenses
Total expenses
Earnings before depreciation, amortisation, net finance costs,
equity accounted investments and income taxes
Amortisation
Depreciation
Total depreciation and amortisation
Net finance costs
Share of net profits of equity accounted investments
Profit/(loss) before income tax
Income tax benefit
Profit for the year
Profit/(loss) attributable to:
Ordinary security holders of the stapled group
- Attributable to THL
- Attributable to THT/TIL
Non-controlling interests - other
Other comprehensive income
Items that may be reclassified to profit or loss in the future
Changes in the fair value of cash flow hedges, net of tax
Share of other comprehensive income of equity accounted investments, net of tax
Movement in share-based payments reserve
Exchange differences on translation of US operations, net of tax
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year is attributable to:
Ordinary security holders of the stapled group
- Attributable to THL
- Attributable to THT/TIL
Non-controlling interests – other
Note
B5
B16
B13
B22
B7
B23
2017
$M
2,732
(168)
(335)
(592)
(5)
(106)
(1,206)
2016
$M
2,210
(149)
(309)
(282)
(131)
(91)
(962)
1,526
1,248
(561)
(67)
(628)
(749)
25
174
35
209
83
156
239
(30)
209
76
8
1
20
105
314
95
240
(21)
314
(527)
(57)
(584)
(728)
17
(47)
69
22
44
55
99
(77)
22
(79)
(11)
–
(12)
(102)
(80)
48
(26)
(102)
(80)
Earnings per security attributable to ordinary security holders of the stapled group:
Basic and diluted earnings per stapled security
B9
11.7
5.0
Cents
Cents
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
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2017 Transurban Annual Report
Transurban Holdings Limited
Consolidated balance sheet
for the year ended 30 June 2017
Transurban Holdings Limited
Consolidated balance sheet
2017
for the year ended 30 June 2017
$M
20161
$M
Note
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
ASSETS
Held-to-maturity investments
Current assets
Total current assets
Cash and cash equivalents
Trade and other receivables
Non-current assets
Held-to-maturity investments
Equity accounted investments
Total current assets
Held-to-maturity investments
Derivative financial instruments
Non-current assets
Property, plant and equipment
Equity accounted investments
Deferred tax assets
Held-to-maturity investments
Intangible assets
Derivative financial instruments
Total non-current assets
Property, plant and equipment
Deferred tax assets
Total assets
Intangible assets
Total non-current assets
LIABILITIES
Current liabilities
Total assets
Trade and other payables
Borrowings
LIABILITIES
Derivative financial instruments
Current liabilities
Maintenance provision
Trade and other payables
Distribution provision
Borrowings
Other provisions
Derivative financial instruments
Other liabilities
Maintenance provision
Total current liabilities
Distribution provision
Other provisions
Non-current liabilities
Other liabilities
Borrowings
Total current liabilities
Deferred tax liabilities
Maintenance provision
Non-current liabilities
Other provisions
Borrowings
Derivative financial instruments
Deferred tax liabilities
Other liabilities
Maintenance provision
Total non-current liabilities
Other provisions
Derivative financial instruments
Total liabilities
Other liabilities
Total non-current liabilities
Net assets
Note
B8
B8
B8
B8
B8
B8
B22
B28
B15
B22
B7
B28
B16
B15
B7
B16
B8
B14
B15
B17
B8
B10
B14
B15
B17
B10
B14
B7
B17
B14
B15
B7
B17
B15
2017
$M
988
138
157
1,283
988
138
157
654
1,283
586
82
327
654
1,061
586
19,330
82
22,040
327
1,061
23,323
19,330
22,040
23,323
347
880
5
99
347
594
880
40
5
174
99
2,139
594
40
174
12,868
2,139
931
895
93
12,868
362
931
228
895
15,377
93
362
17,516
228
15,377
5,807
20161
$M
834
121
–
955
834
121
–
971
955
369
121
268
971
1,097
369
19,259
121
22,085
268
1,097
23,040
19,259
22,085
23,040
410
405
17
94
410
516
405
31
17
132
94
1,605
516
31
132
12,468
1,605
981
836
47
12,468
393
981
252
836
14,977
47
393
16,582
252
14,977
6,458
16,582
Total liabilities
EQUITY
1,422
Contributed equity
6,458
Net assets
(66)
Reserves
(3,129)
Accumulated losses
EQUITY
6,808
Non-controlling interests held by security holders of the stapled group (THT/TIL)
1,422
Contributed equity
5,035
Equity attributable to security holders of the stapled group
(66)
Reserves
1,423
Non-controlling interests – other
(3,129)
Accumulated losses
6,458
Total equity
6,808
Non-controlling interests held by security holders of the stapled group (THT/TIL)
5,035
Equity attributable to security holders of the stapled group
1,423
Non-controlling interests – other
1. The 30 June 2016 balances have been restated to reflect the final fair value of the purchase price allocation balances of AirportlinkM7, which
6,458
Total equity
17,516
1,450
5,807
(54)
(3,190)
6,289
1,450
4,495
(54)
1,312
(3,190)
5,807
6,289
4,495
1,312
5,807
was acquired on 1 April 2016. Refer to note B21.
B11
B12
B23
B11
B12
B23
1. The 30 June 2016 balances have been restated to reflect the final fair value of the purchase price allocation balances of AirportlinkM7, which
was acquired on 1 April 2016. Refer to note B21.
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
48
48
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2017 Transurban Annual Report
Attributable to security holders of the stapled group
No. of
securities
M
Contributed
equity
$M
Accumulated
losses
Attributable to security holders of the stapled group
$M
Reserves
$M
Transurban Holdings Limited
Consolidated statement of changes in equity
for the year ended 30 June 2017
Transurban Holdings Limited
Consolidated statement of changes in equity
for the year ended 30 June 2017
Non-controlling
interests–
THT & TIL
$M
Non-
controlling
interests–other
$M
Total
equity
$M
Total
$M
Balance at 1 July 2016
Comprehensive income
Profit/(loss) for the year
2,036
No. of
securities
M
–
1,422
Contributed
equity
$M
–
(66)
Reserves
$M
–
(3,129)
Accumulated
losses
$M
83
Non-controlling
6,808
interests–
THT & TIL
$M
156
(3,129)
–
83
83
–
83
–
Other comprehensive
Balance at 1 July 2016
income/(loss)
Comprehensive income
Total comprehensive
Profit/(loss) for the year
income/(loss)
Other comprehensive
Transactions with
income/(loss)
owners in their
capacity as owners:
Total comprehensive
income/(loss)
Employee performance
awards issued1
Transactions with
owners in their
Distributions provided
capacity as owners:
for or paid2
Employee performance
Distribution reinvestment
awards issued1
plan3
Distributions provided
controlling interests4
Distribution reinvestment
Distributions to non-
for or paid2
plan3
2,036
–
–
–
–
–
1
–
1
15
–
–
16
15
1,422
–
–
–
–
–
1
–
1
27
–
–
28
27
Balance at 30 June 2017
Distributions to non-
controlling interests4
2,052
1,450
(54)
–
–
(66)
12
–
12
12
12
–
–
–
–
–
–
–
–
–
–
5,035
Total
$M
239
5,035
96
Non-
1,423
controlling
interests–other
$M
(30)
6,458
Total
equity
$M
209
1,423
9
6,458
105
6,808
84
156
240
239
335
(30)
(21)
209
314
84
96
9
105
240
3
335
4
(21)
–
–
314
4
(1,055)
(144)
(911)
(1,055)
–
–
(144)
–
(144)
(3,190)
–
–
149
3
176
4
–
–
176
4
(911)
–
(1,055)
–
(759)
149
(875)
176
6,289
4,495
(90)
–
(90)
–
(1,055)
(90)
(965)
176
1,312
5,807
–
–
(90)
(90)
1. From 2012 it is the Group’s policy that a portion of all Short Term Incentives issued to the CEO and other senior executives are deferred for a
(144)
(759)
(875)
(90)
(965)
16
28
Balance at 30 June 2017
period of 2 years. In addition to the Short Term Incentives, Stapled Securities (including units in the Trust) were issued to executives under the
Group’s Long Term Incentive share-based payment plans. These securities are held by the executive but will only vest in accordance with the
terms of the plans.
(3,190)
1,450
2,052
1,312
6,289
4,495
(54)
5,807
1. From 2012 it is the Group’s policy that a portion of all Short Term Incentives issued to the CEO and other senior executives are deferred for a
2. Refer to note B10 for further details of dividends and distributions provided for or paid.
3. Under the distribution reinvestment plan, holders of stapled securities may elect to have all or part of their distribution entitlements satisfied by
period of 2 years. In addition to the Short Term Incentives, Stapled Securities (including units in the Trust) were issued to executives under the
Group’s Long Term Incentive share-based payment plans. These securities are held by the executive but will only vest in accordance with the
terms of the plans.
4. Dividends and distributions were paid during the period to the non-controlling interest partners in Airport Motorway Trust (Eastern Distributor),
the issue of new stapled securities rather than by cash.
2. Refer to note B10 for further details of dividends and distributions provided for or paid.
Transurban Queensland Invest Trust and Transurban Queensland Holdings 1 Pty Ltd (Transurban Queensland).
3. Under the distribution reinvestment plan, holders of stapled securities may elect to have all or part of their distribution entitlements satisfied by
the issue of new stapled securities rather than by cash.
4. Dividends and distributions were paid during the period to the non-controlling interest partners in Airport Motorway Trust (Eastern Distributor),
Transurban Queensland Invest Trust and Transurban Queensland Holdings 1 Pty Ltd (Transurban Queensland).
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
49
49
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2017 Transurban Annual Report
Transurban Holdings Limited
Consolidated statement of changes in equity
for the year ended 30 June 2017
Transurban Holdings Limited
Consolidated statement of changes in equity
for the year ended 30 June 2017
Attributable to security holders of the stapled group
No. of
securities
M
No. of
1,914
securities
M
Balance at 1 July 2015
Comprehensive income
Attributable to security holders of the stapled group
Contributed
equity
$M
Contributed
1,237
equity
$M
Accumulated
losses
$M
Accumulated
(3,034)
losses
$M
Non-controlling
interests–
THT & TIL
$M
Non-controlling
interests–
6,636
THT & TIL
$M
(70)
Reserves
$M
Reserves
$M
Total
$M
4,769
Total
$M
Non-
controlling
interests–other
$M
Non-
controlling
1,227
interests–other
$M
Total
equity
$M
Total
5,996
equity
$M
Balance at 1 July 2015
Profit/(loss) for the year
–
1,914
–
1,237
–
(70)
44
(3,034)
55
6,636
99
4,769
(77)
1,227
22
5,996
Other comprehensive
Comprehensive income
income/(loss)
Profit/(loss) for the year
Total comprehensive
Other comprehensive
income/(loss)
income/(loss)
Transactions with
Total comprehensive
owners in their
income/(loss)
capacity as owners:
Transactions with
Contributions of equity,
owners in their
net of transaction
capacity as owners:
costs1
Contributions of equity,
Employee performance
net of transaction
awards issued2
costs1
Distributions provided
Employee performance
for or paid3
awards issued2
Distribution reinvestment
Distributions provided
plan4
for or paid3
Distributions to non-
Distribution reinvestment
controlling interests5
plan4
Distributions to non-
controlling interests5
Balance at 30 June 2016
–
–
–
–
–
107
1
107
–
1
14
–
–
14
122
–
2,036
122
–
–
–
–
–
163
–
163
–
–
22
–
–
22
185
–
1,422
185
4
–
4
4
4
–
–
–
–
–
–
–
–
–
–
–
(66)
–
–
44
44
–
44
–
–
–
(139)
–
–
(139)
–
–
(139)
–
(3,129)
(139)
(81)
55
(26)
(81)
(77)
99
22
(77)
(25)
(77)
(102)
(25)
(102)
22
(80)
(102)
(26)
22
(102)
(80)
843
1,006
356
1,362
2
843
2
1,006
(762)
2
115
(762)
–
115
198
–
6,808
198
(901)
2
137
(901)
–
137
244
–
5,035
244
–
356
–
–
–
–
(58)
–
298
(58)
1,423
298
2
1,362
(901)
2
137
(901)
(58)
137
542
(58)
6,458
542
Balance at 30 June 2016
2,036
1. During December 2015, the Group successfully completed the fully underwritten institutional and retail components of its renounceable 1 for 18
6,458
pro rata entitlement offer. The institutional component raised $726 million and the retail component raised $280 million at an issue price of $9.60
per security. The total proceeds from the entitlement offer (net of equity issue costs) were approximately $1,006 million and were used to fund
1. During December 2015, the Group successfully completed the fully underwritten institutional and retail components of its renounceable 1 for 18
the Group’s equity contribution for the AirportlinkM7 acquisition which reached financial close in April 2016, with the remainder used for general
pro rata entitlement offer. The institutional component raised $726 million and the retail component raised $280 million at an issue price of $9.60
corporate purposes.
per security. The total proceeds from the entitlement offer (net of equity issue costs) were approximately $1,006 million and were used to fund
In March 2016, the non-controlling partners in Transurban Queensland (Australian Super and Tawreed) contributed $356 million as their equity
the Group’s equity contribution for the AirportlinkM7 acquisition which reached financial close in April 2016, with the remainder used for general
contribution for the acquisition of AirportlinkM7. The Group’s equity contribution into Transurban Queensland is eliminated upon consolidation.
corporate purposes.
(3,129)
6,808
1,422
5,035
1,423
(66)
2. From 2012 it is the Group’s policy that a portion of all Short Term Incentives issued to the CEO and other senior executives are deferred for a
In March 2016, the non-controlling partners in Transurban Queensland (Australian Super and Tawreed) contributed $356 million as their equity
period of 2 years. In addition to the Short Term Incentives, Stapled Securities (including units in the Trust) were issued to executives under the
contribution for the acquisition of AirportlinkM7. The Group’s equity contribution into Transurban Queensland is eliminated upon consolidation.
Group’s Long Term Incentive share-based payment plans. These securities are held by the executive but will only vest in accordance with the
terms of the plans.
2. From 2012 it is the Group’s policy that a portion of all Short Term Incentives issued to the CEO and other senior executives are deferred for a
period of 2 years. In addition to the Short Term Incentives, Stapled Securities (including units in the Trust) were issued to executives under the
3. Refer to note B10 for further details of dividends and distributions provided for or paid.
Group’s Long Term Incentive share-based payment plans. These securities are held by the executive but will only vest in accordance with the
4. Under the distribution reinvestment plan, holders of stapled securities may elect to have all or part of their distribution entitlements satisfied by
terms of the plans.
the issue of new stapled securities rather than by cash.
3. Refer to note B10 for further details of dividends and distributions provided for or paid.
5. Distributions were paid during the period to the non-controlling interest partners in Airport Motorway Trust (Eastern Distributor) and Transurban
4. Under the distribution reinvestment plan, holders of stapled securities may elect to have all or part of their distribution entitlements satisfied by
Queensland Invest Trust (Transurban Queensland).
the issue of new stapled securities rather than by cash.
5. Distributions were paid during the period to the non-controlling interest partners in Airport Motorway Trust (Eastern Distributor) and Transurban
Queensland Invest Trust (Transurban Queensland).
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
50
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2017 Transurban Annual Report
Transurban Holdings Limited
Consolidated statement of cash flows
for the year ended 30 June 2017
Transurban Holdings Limited
Consolidated statement of cash flows
2016
2017
Note
for the year ended 30 June 2017
$M
$M
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments for maintenance of intangible assets
Cash flows from operating activities
Transaction and integration costs related to acquisitions
Receipts from customers
Other revenue
Payments to suppliers and employees
Interest received
Payments for maintenance of intangible assets
Interest paid
Transaction and integration costs related to acquisitions
Net cash inflow from operating activities
Other revenue
Interest received
Cash flows from investing activities
Interest paid
Payments for held-to-maturity investments
Net cash inflow from operating activities
Payments for intangible assets
Payments for property, plant and equipment
Cash flows from investing activities
Distributions received from equity accounted investments
Payments for held-to-maturity investments
Payments for acquisition of subsidiaries, net of cash acquired
Payments for intangible assets
Net cash outflow from investing activities
Payments for property, plant and equipment
Distributions received from equity accounted investments
Cash flows from financing activities
Payments for acquisition of subsidiaries, net of cash acquired
Proceeds from equity issued to non-controlling interests
Net cash outflow from investing activities
Proceeds from issues of stapled securities
Proceeds from borrowings (net of costs)
Cash flows from financing activities
Repayment of borrowings
Proceeds from equity issued to non-controlling interests
Dividends and distributions paid to the Group's security holders
Proceeds from issues of stapled securities
Distributions paid to non-controlling interests
Proceeds from borrowings (net of costs)
Net cash inflow from financing activities
Repayment of borrowings
Dividends and distributions paid to the Group's security holders
Net increase/(decrease) in cash and cash equivalents
Distributions paid to non-controlling interests
Net cash inflow from financing activities
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at end of the year
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Note
(a)
(a)
B10
B10
B10
B10
B8
Cash and cash equivalents at end of the year
(a) Reconciliation of profit after income tax to net cash flow from operating activities
B8
(a) Reconciliation of profit after income tax to net cash flow from operating activities
Profit for the year
Depreciation and amortisation
Non-cash share-based payments expense
Non-cash net finance costs
Profit for the year
Share of profits of equity accounted investments
Depreciation and amortisation
Non-cash share-based payments expense
Change in operating assets and liabilities:
Non-cash net finance costs
Share of profits of equity accounted investments
(Increase) / decrease in trade and other receivables
Increase in concession and promissory note liability
(Decrease) / increase in operating creditors and accruals
Change in operating assets and liabilities:
Increase in other operating provisions
(Increase) / decrease in trade and other receivables
Movement in deferred and current taxes
Increase in concession and promissory note liability
Increase in maintenance provision
(Decrease) / increase in operating creditors and accruals
Net cash inflow from operating activities
Increase in other operating provisions
Movement in deferred and current taxes
Increase in maintenance provision
Net cash inflow from operating activities
B22
B22
2,266
2017
(679)
$M
(69)
(113)
2,266
57
(679)
27
(69)
(652)
(113)
837
57
27
(652)
(344)
837
(647)
(131)
350
(344)
–
(647)
(772)
(131)
350
–
–
(772)
–
2,703
(1,718)
–
(801)
–
(90)
2,703
94
(1,718)
(801)
159
(90)
94
834
(5)
159
988
834
(5)
988
2017
$M
209
2017
628
$M
5
81
209
(25)
628
5
81
(17)
(25)
11
(95)
11
(17)
(35)
11
64
(95)
837
11
(35)
64
837
2,055
2016
(624)
$M
(52)
(23)
2,055
66
(624)
31
(52)
(543)
(23)
910
66
31
(543)
(187)
910
(437)
(78)
127
(187)
(1,869)
(437)
(2,444)
(78)
127
(1,869)
356
(2,444)
1,006
3,896
(3,401)
356
(689)
1,006
(55)
3,896
1,113
(3,401)
(689)
(421)
(55)
1,113
1,249
6
(421)
834
1,249
6
834
2016
$M
22
584
2016
3
$M
87
22
(17)
584
3
87
5
(17)
21
158
25
5
(69)
21
91
158
910
25
(69)
91
910
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
51
51
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2017 Transurban Annual Report
Section B: Notes to the Group financial statements
Transurban Holdings Limited
for the year ended 30 June 2017
52
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
Basis of preparation and significant changes
B1 Corporate Information
Transurban Holdings Limited (‘the Company’, ‘the Parent’ or ‘THL’) is a company incorporated in Australia and
limited by shares that are publicly traded on the Australian Securities Exchange. These financial statements have
been prepared as a consolidation of the financial statements of Transurban Holdings Limited and its controlled
entities (‘Transurban’, ‘Transurban Group’ or ‘the Group’). The controlled entities of THL include the other
members of the stapled group being Transurban International Limited and its controlled entities (‘TIL’) and
Transurban Holding Trust and its controlled entities (‘THT’). The equity securities THL, THT and TIL are stapled
and cannot be traded separately. Entities within the Group are domiciled and incorporated in Australia and the
United States of America.
The consolidated financial statements of Transurban Group for the year ended 30 June 2017 were authorised for
issue in accordance with a resolution of the Directors on 8 August 2017. Directors have the power to amend and
reissue the financial report.
B2 Summary of significant changes in the current reporting period
During the year ended 30 June 2017, there have been no significant changes in accounting for our assets.
B3 Basis of preparation
The Group financial statements are general purpose financial statements which:
§ Have been prepared in accordance with the Corporations Act 2001, Australian accounting standards, and
other authoritative pronouncements of the Australian Accounting Standards Board;
§ 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 ASIC Corporations (Stapled Group Reports) Instrument 2015/838 to present the
consolidated financial statements in one section (Section A), and all other reporting group members in a
separate section (Section C).
§ Do 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 THL’s functional and presentation currency.
§ Have been rounded to the nearest million dollars, unless otherwise stated, in accordance with ASIC
Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/191; and
§ The presentation of comparative amounts has been restated, where applicable, to conform to the current
period presentation.
Going concern
THL’s current liabilities exceed its current assets by $856 million as at 30 June 2017. This is primarily driven by
borrowing facilities with maturities less than 12 months. 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 $837 million (2016: $910 million),
after allowing for payments of $113 million (2016: $23 million) in transaction and integration costs relating to
acquisitions;
§ The Group reached financial close on 7 July 2017 for a new $1.1 billion syndicated bank debt facility that
refinances an existing working capital facility, which demonstrates our ability to refinance our debt due in the
next 12 months;
§ The Group expects to refinance those remaining borrowing facilities with maturities of less than 12 months;
and
§ The Group has paid $801 million of dividends and distributions over the past 12 months.
53
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2017 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B3 Basis of preparation (continued)
Foreign currency translation
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions, and from the translation at year end exchange rates of monetary assets and liabilities denominated
in foreign currencies, are recognised in profit or loss, except 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.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair
value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary
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 non-monetary assets such as equities classified as
available-for-sale financial assets are recognised in the fair value reserve in equity.
Foreign operations
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 (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.
On 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 taken to other
comprehensive income.
New and amended standards
The Group has adopted the following new or revised accounting standards which became effective for the annual
reporting period commencing 1 July 2016. The Group determined there is no impact on the financial statements
from the adoption.
Reference
Description
AASB 2015-1
These amendments clarify various Australian accounting standards.
AASB 2015-2
These amendments are designed to further encourage companies to apply professional
judgment in determining what information to disclose in the financial statements.
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55
2017 Transurban Annual ReportTransurban Holdings Limited Notes to the consolidated financial statements for the year ended 30 June 2017 55 B3 Basis of preparation (continued) Accounting standards and interpretations issued but not yet effective Certain new accounting standards and interpretations have been published but are not mandatory for 30 June 2017 reporting periods. The Group's assessment of the impact of these new standards and interpretations is set out below. Reference Description and Impact on the Group Application of the standard Application by the Group AASB 9 Financial instruments AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities. It also includes an expected loss impairment model and a reformed approach to hedge accounting. The standard will be applicable retrospectively. There will be no impact on the accounting for the Group’s financial liabilities as the new standard only impacts financial liabilities designated at fair value through profit or loss and the Group does not have any such liabilities. The Group does not have any available for sale financial assets. The Group has not yet completed its assessment of how its hedging arrangements and the impairment of financial instruments under the expected credit loss model will be affected by the new rules; however, it does not expect the impact to be material. Increased disclosures may be required in the financial statements. The Group’s assessment of the potential accounting, disclosure and financial impacts on adoption of the standard will continue up to the date of application. 1 January 2018 1 July 2018 AASB 15 Revenue from contracts with customers 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. There will be no material impact on the Group’s accounting policies on the adoption of the standard, however there will be new disclosure requirements. 1 January 2018 1 July 2018 Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B3 Basis of preparation (continued)
Accounting standards and interpretations issued but not yet effective (continued)
Reference
Description and Impact on the Group
AASB 16
Leases
AASB 2016-1
AASB 16 modifies accounting for leases by removing the
current distinction between operating and financing leases. The
standard requires recognition of an asset and a financial liability
for all leases, with exemptions for short term and low value
leases. Under the new standard, entities will no longer be
required to distinguish between finance leases and operating
leases.
The standard will primarily affect the accounting for the Group’s
operating leases. As at the reporting date, the Group has non-
cancellable operating lease commitments of $42 million (see
note B26).
On transition and moving forward, for operating leases for
which payments are currently required to be expensed, the
Group will recognise right of use assets and corresponding
liabilities for the principal amount of lease payments, which will
then result in amortisation and interest expenses being
recognised in the income statement (replacing operating lease
expenses). Further, the principal component of lease payments
will be reclassified from operating to financing in the statement
of cash flows.
Certain performance metrics and ratios will be impacted as a
result of the above changes, including Proportional EBITDA,
Proportional Net Costs and Free Cash, which are measures
used to assess senior executive performance as part of the
Group’s remuneration framework.
The Group is still considering the available options for transition
and has not yet forecasted the financial impacts of the new
standard, but will do so leading up to application of the
standard.
Amendment to AASB 112 clarifies the accounting for deferred
tax where an asset is measured at fair value and that fair value
is below the asset’s tax base. This does not change the
underlying principles for the recognition of deferred tax assets.
The Group does not have any temporary taxable or deductible
differences on assets that are measured at fair value. Therefore
the impact of the application of the new standard is not
expected to be material.
Application of
the standard
Application
by the Group
1 January 2019 1 July 2019
1 January 2017 1 July 2017
AASB 2016-2
Amendment to AASB 107 introduces additional disclosures that
will enable users of financial statements to evaluate changes in
liabilities arising from financing activities.
1 January 2017 1 July 2017
The impact of the application of the new standard will be
additional disclosure in the Group financial statements relating
to the financial liabilities held by the Group.
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2017 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B3 Basis of preparation (continued)
Accounting standards and interpretations issued but not yet effective (continued)
Reference
Description and Impact on the Group
AASB 2016-5
AASB 2017-1
Amendments made to AASB 2 clarify how to account for
cash-settled share-based payments with performance
conditions, modifications that change a cash-settled
arrangement to an equity-settled arrangement, and equity-
settled awards that include a ‘net settlement’ feature which
requires employers to withhold amounts to settle the
employee’s tax obligations.
Management has undertaken an assessment of the impact of
this standard and does not believe that the impact will be
material.
Amendment to AASB 128 clarifies that an entity that is not an
investment entity may elect to retain the fair value
measurement applied by its associates and joint ventures
that are investment entities when applying the equity method.
Management has undertaken an assessment of the impact of
this standard and does not believe that the impact will be
material.
Application of
the standard
Application
by the Group
1 January 2018 1 July 2018
1 January 2018 1 July 2018
AASB 2017-2
Amendment to AASB 12 clarifies the scope of the standard.
1 January 2017 1 July 2017
Management has undertaken an assessment of the impact of
this standard and does not believe that the impact will be
material.
Interpretation
22
The interpretation clarifies how to apply the standard on
foreign currency transactions, AASB 121, when an entity
pays or receives consideration in advance for foreign
currency-denominated contracts.
1 January 2018 1 July 2018
Management has undertaken an assessment of the impact of
this standard and does not believe that the impact will be
material.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated by management and are based on historical experience and
other factors, including expectations of future events that may have a financial impact on the Group and that are
believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities are found in the following notes:
§ Income taxes
§ Fair value of derivatives and other financial instruments
§ Estimated impairment of intangible assets and cash generating units
§ Provision for maintenance expenditure
§ Valuation of promissory notes and concession notes
Note B7
Note B15
Note B16
Note B17
Note B18
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
Operating performance
B4 Segment information
In the segment information provided to the Executive Committee (chief operating decision maker), segments are
defined by the geographical networks in which the Group operates being Melbourne, Sydney, Brisbane and the
Greater Washington Area. The Group's corporate function is not an operating segment under the requirements of
AASB 8 as its revenue generating activities are only incidental to the business.
The Executive Committee assesses the performance of the networks based on a measure of proportional
earnings before depreciation, amortisation, net finance costs and income taxes (‘Proportional EBITDA’). This
reflects the contribution of each network in the Group in the proportion of Transurban's equity ownership. Interest
income and expenses are allocated to the networks where the amounts are related specifically to the assets.
Otherwise they are allocated to the Corporate function.
Significant items are those items where their nature and amount is considered material to the financial statements
and not in the ordinary course of business. Refer to note B6 for further details.
The diagram below shows the assets included in each geographical network, together with the ownership
interests held by the Group for the current financial year:
1. AirportlinkM7 was acquired on 1 April 2016.
2. Westlink M7 and NorthConnex form the NorthWestern Roads Group.
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B4 Segment information (continued)
Segment information – proportional income statement
2017
$M
Toll revenue
Other revenue
Total proportional revenue
Underlying proportional EBITDA
Significant items
Proportional EBITDA
2016
$M
Toll revenue
Other revenue
Total proportional revenue
Underlying proportional EBITDA
Significant items
Proportional EBITDA
Melbourne
Sydney
Brisbane
GWA
687
22
709
594
–
594
872
31
903
702
–
702
385
2
387
268
–
268
209
–
209
116
–
116
Melbourne
Sydney
Brisbane
GWA
660
21
681
564
–
564
799
28
827
637
–
637
313
7
320
218
(82)
136
174
–
174
86
–
86
Corporate
and other
–
3
3
(51)
–
(51)
Corporate
and other
–
4
4
(25)
–
(25)
Total
2,153
58
2,211
1,629
–
1,629
Total
1,946
60
2,006
1,480
(82)
1,398
Reconciliation of segment information to statutory financial information
The proportional results presented above are different from the statutory financial results of the Group due to the
proportional presentation of each asset’s contribution to each geographical network.
Segment revenue
Revenue from external customers is through toll and service and fee revenues earned on toll roads. There are no
inter-segment revenues. Segment revenue reconciles to total statutory revenue as follows:
Total segment revenue (proportional)
Add:
Revenue attributable to non-controlling interests
Construction revenue from road development activities
Less:
Proportional revenue of non-100% owned equity accounted assets
Total statutory revenue
Note
B5
Proportional EBITDA
Proportional EBITDA reconciles to profit/(loss) before income tax as follows:
Proportional EBITDA
Add: EBITDA attributable to non-controlling interests
Less: Proportional EBITDA of non-100% owned equity accounted assets
Statutory profit before depreciation, amortisation, net finance costs, equity
accounted investments and income taxes
Statutory net finance costs
Statutory depreciation and amortisation
Share of net profit from equity accounted investments
Profit/(loss) before income tax
2017
$M
2,211
271
592
(342)
2,732
2017
$M
1,629
186
(289)
1,526
(749)
(628)
25
174
2016
$M
2,006
224
282
(302)
2,210
2016
$M
1,398
106
(256)
1,248
(728)
(584)
17
(47)
59
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2017 Transurban Annual Report
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2017 Transurban Annual ReportTransurban Holdings Limited Notes to the consolidated financial statements for the year ended 30 June 2017 60 B5 Revenue 2017 $M 2016 $M Toll revenue 2,083 1,870 Construction revenue 592 282 Other revenue 57 58 Total revenue 2,732 2,210 Accounting policy The Group generates the following types of revenue: Revenue type Recognition Toll revenue Recognised when the charge is incurred by the user and the amount is determined to be recoverable by the Group. Construction revenue Revenue for the construction of service concession infrastructure assets is recognised in accordance with the percentage of completion method, which is measured by reference to costs incurred to date as a percentage of total forecast costs for each project. Other revenue Includes management fee revenue, business development revenue and other road revenue, and is recognised to the extent that incurred costs will be recovered. B6 Significant items Significant items are those items where their nature and amount is considered material to the financial statements and not in the ordinary course of business. Such items included within the Group's results are detailed below: 2017 2016 Statutory $M Proportional $M Statutory $M Proportional $M Stamp duty on acquisitions (a) - - 108 67 Other transaction fees on acquisitions (a) - - 10 6 Integration costs relating to acquisitions (b) - - 13 9 Significant items included within EBITDA - - 131 82 Significant items included within net finance costs (a) - - 5 3 Total significant items - - 136 85 Income tax benefit associated with transaction and integration costs of acquisitions - - (10) (6) Net significant items - - 126 79 (a) Stamp duty and other transaction fees The Transurban Queensland consortium acquisition of AirportlinkM7 was completed on 1 April 2016. The consortium incurred stamp duty and other transaction costs during the year ended 30 June 2016 as a result of the acquisition. The stamp duty was paid in the year ended 30 June 2017. Significant items included within finance costs relate to premiums paid on interest rate swap option contracts entered into as part of the Airportlink M7 acquisition that were not exercised. (b) Integration costs relating to Transurban Queensland and AirportlinkM7 Since acquisition, the Group has incurred costs to integrate Transurban Queensland and AirportlinkM7 into the Transurban Group. These costs include employee costs, consulting and legal fees. The Group incurred $5 million of statutory transaction and integration costs in the year ended 30 June 2017 that were not considered to be significant. These costs are shown in the statement of comprehensive income. Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B7
Income tax
Income tax expense/(benefit)
Current tax
Deferred tax
Under provision in prior years
Deferred income tax expense/(benefit) included in income tax expense/(benefit) comprises:
(Increase) in deferred tax assets
Increase in deferred tax liabilities
Reconciliation of income tax expense/(benefit) to prima facie tax payable
Profit/(loss) before income tax expense/(benefit)
Tax at the Australian tax rate of 30.0% (2016: 30.0%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Trust income not subject to tax
Equity accounted results
Tax rate differential
Non-deductible interest
Non-deductible depreciation
Prior year tax losses recognised
Sundry items
Under/(over) provision in prior years
Income tax benefit
Tax expense/(income) relating to items of other comprehensive income
Cash flow hedges
2017
$M
(49)
11
3
(35)
(14)
25
11
2017
$M
174
52
(61)
(7)
(3)
13
(12)
(16)
(4)
3
(35)
18
18
2016
$M
(70)
(24)
25
(69)
(68)
44
(24)
2016
$M
(47)
(14)
(52)
(5)
(9)
21
(15)
(23)
3
25
(69)
(56)
(56)
Deferred tax assets and liabilities
Assets
Liabilities
The balance comprises temporary differences attributable to:
Provisions
Current and prior year losses
Fixed assets/intangibles
Concession fees and promissory notes
Cash flow hedges
Other
Tax assets/(liabilities)
Set-off of tax
Net tax assets/(liabilities)
Movements:
Opening balance at 1 July
Credited to the statement of comprehensive income
Credited/(charged) to equity
Acquired
Foreign exchange movements
Transfer from deferred tax assets/liabilities
Other
Closing balance at 30 June
Deferred tax assets/(liabilities) to be recovered after more than 12 months
61
2017
$M
361
882
587
–
135
1
1,966
(905)
1,061
2,007
14
(32)
–
(21)
(53)
51
1,966
1,966
2016
$M
313
845
693
–
152
4
2,007
(910)
1,097
1,881
68
71
7
8
(65)
37
2,007
2,007
2017
$M
2016
$M
–
–
(1,346)
(407)
(83)
–
(1,836)
905
(931)
(1,891)
(25)
14
–
13
53
–
(1,836)
(1,836)
–
–
(1,426)
(369)
(96)
–
(1,891)
910
(981)
(1,889)
(44)
(15)
(3)
(6)
65
1
(1,891)
(1,891)
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B7
Income tax (continued)
Accounting policy
The income tax expense/benefit for the period is the tax payable or benefit on the current period's taxable income
based on the applicable income tax rate for each jurisdiction, adjusted 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 substantively enacted at the
end of the reporting period in the countries where the Company operates and generates taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
The Transurban stapled group comprises two corporate entities (THL and TIL) and a trust (THT). THT operates
as a flow-through trust, and is not liable to pay tax itself. Instead, security holders pay tax on the distributions they
receive from the trust at their individual marginal tax rates. The Group is structured in this way because the initial
heavy capital investment and associated debt funding required for infrastructure investments results in accounting
losses being generated in the initial years which would otherwise prevent a company from paying dividends. The
trust enables distributions to be made to security holders throughout the life of the asset.
Deferred income tax is provided 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. However,
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 have 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 will be available 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 investments in foreign operations where the Company is able to control the timing of the reversal of
the temporary differences and it is probable that the differences will not reverse 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.
Current and deferred 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.
Investment allowances
Companies 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 deferred tax asset is recognised for unclaimed tax credits
that are carried forward as tax losses.
Tax consolidation legislation
The Transurban Group has adopted the Australian tax consolidation legislation for THL and its wholly-owned
Australian entities from 1 July 2005.
All entities within the Australian tax consolidated groups continue to 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.
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Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B7
Income tax (continued)
Tax consolidation legislation (continued)
The tax consolidated groups within the Group are summarised as follows:
1. Entity is classified as a partnership for tax purposes.
2. There are no tax groups under THT.
THL tax consolidated group
The entities in the THL tax consolidated group entered into a tax sharing agreement (‘TSA’) effective from
29 April 2009.
The entities in the THL tax consolidated group have also entered into a tax funding agreement (‘TFA’) effective from
1 July 2008. Under the TFA the wholly-owned entities fully compensate THL for any current tax payable assumed and
are compensated by THL for any current tax receivable and deferred tax assets relating to tax losses. The funding
amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.
The amount receivable/payable under the TFA is calculated at the end of the financial year for each wholly-owned
entity. THL determines and communicates the amount payable/receivable to each wholly-owned entity along with the
method of calculation and any other information deemed necessary.
Transurban Queensland tax consolidated group
The entities in the Transurban Queensland Holdings 1 Pty Ltd (‘TQH1’) tax consolidated group entered into a TSA
effective from 2 July 2014. The entities in the TQH1 tax consolidated group have also entered into a TFA effective
from 2 July 2014. APL Hold Co Pty Ltd (‘AirportlinkM7’) and its controlled entities entered the Transurban
Queensland tax consolidated group effective from 23 November 2015.
Under the TFA the wholly-owned entities fully compensate TQH1 for any current tax payable assumed and are
compensated by TQH1 for any current tax receivable and deferred tax assets relating to tax losses. The funding
amounts are determined by reference to the amounts recognised in the wholly-owned entities financial
statements.
The amount receivable/payable under the TFA is calculated at the end of the financial year for each wholly-owned
entity. TQH1 determines and communicates the amount payable / receivable to each wholly-owned entity along
with the method of calculation and any other information deemed necessary.
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B7
Income tax (continued)
Transurban DRIVe tax consolidated group
Transurban DRIVe Holdings LLC (‘TDH’) is the head company of the DRIVe tax consolidated group. The DRIVe
tax consolidated group is consolidated for US tax purposes in the sense that the 100% subsidiaries of TDH have
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 TDH, as head entity, carries any tax liability or benefits arising in the group.
The DRIVe tax consolidated group currently owns 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.
Goods and Services Tax (‘GST’)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the
asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST 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 GST 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.
Key estimate
The Group is subject to income taxes in Australia and the USA. Significant judgement is required in
determining the provision for income taxes. There are many transactions and calculations undertaken during
the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises
liabilities for anticipated tax audit issues based on whether additional taxes will be due. Where the final tax
outcome of these matters is different from the amounts that were initially recorded, such differences will impact
the current and deferred tax assets and liabilities in the period in which such determination is made.
The Group has recognised deferred tax assets relating to carried forward tax losses to the extent there are
sufficient taxable temporary differences relating to the same taxation authority against which the unused tax
losses can be utilised. However, the utilisation of tax losses also depends on the ability of the Group to satisfy
certain tests at the time the losses are recouped. In the USA tax losses generally expire after a 20 year period.
Management has reviewed the potential future taxable profits and has recognised deferred tax assets in
relation to tax losses.
64
64
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B8 Working capital
The Group’s working capital balances are summarised as follows:
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Prepayments
Held-to-maturity investments
Current liabilities
Trade payables and accruals
Stamp duty payable on AirportlinkM7 acquisition
Net working capital
Cash and cash equivalents
2017
$M
988
89
41
8
138
157
1,283
(347)
-
(347)
936
2016
$M
834
75
35
11
121
-
955
(302)
(108)
(410)
545
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes
cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities. All cash balances are interest bearing.
The amount shown in cash and cash equivalents includes $223 million not available for general use at 30 June
2017 (2016: $376 million) of which $132 million (2016: $209 million) belongs to TIL. This comprises amounts
required to be held under maintenance and funding reserves and prepaid tolls, which are not available for general
use.
Current held to maturity investments as shown in the table above are short term investments in government
treasuries that are due to mature within 12 months, which management intends to hold to maturity.
Trade and other receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for those with maturities greater than 12 months
after the reporting date which are classified as non-current assets. Trade receivables are recognised initially at
fair value and subsequently measured at amortised cost using the effective interest method, less allowance for
impairment. Trade receivables are due for settlement no more than 30 days from revenue recognition.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be unrecoverable
are written off by reducing the carrying amount of trade debtors directly. An allowance for impairment is used
when there is evidence that the Group will not be able to collect all amounts due according to the original terms of
the receivables. The amount of the allowance for impairment is the difference between the carrying amount and
the amount expected to be recoverable. The additional amount of the allowance for doubtful debtors is recognised
in profit or loss.
As at 30 June 2017, the Group held an allowance for doubtful debtors of $2 million (2016: $2 million), recognised
for current trade receivables that were considered potentially unrecoverable. As at 30 June 2017, trade
receivables of $26 million (2016: $20 million) were overdue but the Group still believes that these overdue
amounts will be received in full. The other classes within trade and other receivables do not contain amounts that
are considered to be potentially unrecoverable.
The carrying amount of trade and other receivables approximates their fair value.
65
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
Security holder outcomes
B9 Earnings per stapled security
Reconciliation of earnings used in calculating earnings per security
Profit attributable to ordinary security holders of the stapled group ($M)
Weighted average number of securities (M)
Basic and diluted earnings per security attributable to the ordinary security holders
of the stapled group (Cents)
2017
239
2,046
11.7
2016
99
1,982
5.0
B10 Dividends/distributions and free cash
Dividends/distributions paid by the Group
Total
$M
Paid in
cash
$M
Settled in
securities
$M
Cents
Date paid/
payable
2016
Declared 15 May 2015
Franked THL
Unfranked THT
Declared 24 November 20151
Franked THL
Unfranked THT
Total paid FY16
2017
Declared 24 May 20161
Franked THL
Unfranked THT
Declared 5 December 20162
Franked THL
Unfranked THT
Total paid FY17
Dividends/distributions payable by the Group
Declared 23 May 20172
Franked THL
Unfranked THT
1. Total declared FY16 is $901 million.
2. Total declared FY17 is $1,055 million.
65
326
391
69
366
435
826
70
396
466
72
439
511
977
72
472
544
56
269
325
56
308
364
689
60
331
391
55
355
410
801
−
−
−
9
57
66
13
58
71
137
10
65
75
17
84
101
176
3.5
17.0
20.5
3.5
19.0
22.5
43.0
3.5
19.5
23.0
3.5
21.5
25.0
48.0
14 August 2015
12 February 2016
12 August 2016
10 February 2017
−
−
−
3.5
23.0
26.5
11 August 2017
66
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B10 Dividends/distributions and free cash (continued)
Distribution policy and free cash calculation
The Group's distribution policy is to align distributions with free cash from operations. The Group calculates free
cash as follows:
Cash flows from operating activities
Add back transaction and integration costs related to acquisitions (non 100% owned entities)
Add back payments for maintenance of intangible assets
Less cash flow from operating activities from consolidated non 100% owned entities
Less allowance for maintenance of intangible assets for 100% owned assets
Adjust for distributions and interest received from non 100% owned entities
M1 Eastern Distributor distribution
M5 distribution and term loan note interest
Transurban Queensland distribution and shareholder loan note interest
NWRG distribution
Free cash
Weighted average securities on issue (millions)1
Free cash per security (cents) – weighted average securities
1. The weighting applied to securities is based on their eligibility for distributions during the year.
Franking credits
Franking credits available for subsequent periods based on a tax rate of 30.0% (2016:
30.0%)
2017
$M
837
113
69
(312)
(61)
55
68
161
290
1,220
2,048
59.6
2017
$M
158
2016
$M
910
23
52
(284)
(60)
44
39
108
94
926
1,978
46.8
2016
$M
193
Franking credits available for subsequent periods relate to Airport Motorway Holdings Pty Ltd ($133 million)
(2016: $133 million) and Transurban Holdings Limited ($25 million) (2016: $60 million).
Distribution provision
A provision for distribution is recognised for any distribution declared and authorised on or before the end of the
reporting period, but not distributed by the end of the reporting period. These distributions are provided for once
they are approved by the board, are announced to equity holders and are no longer at the discretion of the entity.
Movements in distribution provision
Movements in the distribution provision during the financial year are set out below:
Balance at 1 July 2015
Additional provision recognised
Amounts paid
Amounts reinvested
Balance at 30 June 2016
Additional provision recognised
Amounts paid
Amounts reinvested
Balance at 30 June 2017
Distribution to
security holders
$M
Distributions to
non-controlling
interest – other
$M
391
901
(689)
(137)
466
1,055
(801)
(176)
544
47
58
(55)
–
50
90
(90)
–
50
Total
$M
438
959
(744)
(137)
516
1,145
(891)
(176)
594
67
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2017 Transurban Annual Report
Capital and borrowings
B11 Contributed equity
Fully paid stapled securities
Stapled securities
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
2017
$M
1,450
1,450
2016
$M
1,422
1,422
Stapled securities are classified as equity and entitle the holder to participate in distributions and on winding up of
the Group in proportion to the number of securities held. Every holder of a stapled security present at a meeting,
in person or by proxy, is entitled to one vote. The issued units of the Group are made up of a parcel of stapled
securities, each parcel comprising one share in THL, one unit in THT and one share in TIL. The individual
securities comprising a parcel of stapled securities cannot be traded separately.
Other contributed equity attributable to security holders of the Group relating to THT and TIL of $10,974 million is
included within non-controlling interests – THT/TIL.
B12 Reserves
Balance 1 July 2015
Revaluation – gross
Deferred tax
Share of other comprehensive income of equity
accounted investments, net of tax
Balance 30 June 2016
Revaluation – gross
Deferred tax
Transfers to profit
Share of other comprehensive income of equity
accounted investments, net of tax
Balance 30 June 2017
Cash flow
hedges
$M
(94)
18
(2)
Foreign
currency
translation
$M
23
(1)
–
Transactions
with non-
controlling
interests
$M
1
–
–
(11)
(89)
4
–
–
8
(77)
–
22
(4)
1
3
–
22
–
1
–
–
–
–
1
Total
$M
(70)
17
(2)
(11)
(66)
–
1
3
8
(54)
Nature of reserves
Purpose of reserves
Cash flow hedges
Used to record gains or losses on cash flow hedging instruments, which are used by the
Group to mitigate the risk of movements in exchange rates and interest rates. Amounts
are reclassified to profit or loss when the transaction to which the hedge is linked (such
as the payment of interest) affects profit or loss.
Foreign currency
translation
Exchange differences arising on translation of the US operations of the Group are
recognised in this reserve.
Transactions with
non-controlling interests
The Group uses the economic entity approach when accounting for transactions with
non-controlling interests.
68
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B13 Net finance costs
Finance income
Interest income on held-to-maturity investments
Interest income on bank deposits
Total finance income
Finance costs
Interest and finance charges paid/payable
Unwind of discount on liabilities – promissory and concession notes
Unwind of discount on liabilities – other liabilities
Unwind of discount on liabilities – maintenance provision
Net foreign exchange losses
Total finance costs
Net finance costs
2017
$M
42
21
63
(749)
(8)
(15)
(38)
(2)
(812)
(749)
2016
$M
23
23
46
(698)
(19)
(11)
(41)
(5)
(774)
(728)
An additional $13 million (2016: $2 million) of financing costs have been capitalised and included in the carrying
value of assets under construction.
B14 Borrowings
Current
TIFIA
Capital markets debt
U.S. private placement
Term debt
Total current borrowings
Non-current
Working capital facilities
Capital markets debt
U.S. private placement
Term debt
TIFIA
Shareholder loan notes
Total non-current borrowings
Total borrowings
Accounting policy
2017
$M
12
300
163
405
880
30
6,196
2,619
2,527
1,176
320
12,868
2016
$M
–
–
129
276
405
60
5,308
2,078
3,535
1,167
320
12,468
13,748
12,873
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees
paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the
fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it
relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred
or liabilities assumed, is recognised in profit or loss as finance income or finance costs. Borrowings are classified
as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
Borrowing costs are recognised as expenses in the period in which they are incurred, except to the extent to
which they relate to the construction of qualifying assets in which case specifically identifiable borrowing costs are
capitalised into the cost of the asset. Borrowing costs include interest on short-term and long-term borrowings.
Costs incurred in connection with the arrangement of borrowings are capitalised and amortised over the effective
period of the funding.
69
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B14 Borrowings (continued)
Financing arrangements and credit facilities
Credit facilities are provided as part of the overall debt funding structure of the Group. The drawn component of
each facility is shown below:
Corporate debt
Working capital facilities drawn
AUD 100m facility
AUD 100m facility
Net capitalised borrowing costs
Capital markets debt
Domestic wrapped bond AUD 300m
EMTN CAD 250m
EMTN EUR 500m
EMTN EUR 600m
EMTN EUR 500m
US 144A USD 550m
US 144A USD 550m
EMTN NOK 750m
Net capitalised borrowing costs
U.S. private placement
Nov 2006 – Tranche A USD 43m (plus accreted interest)1
Dec 2004 – Tranche B USD 39m1
Aug 2005 – Tranche B USD 126m
Nov 2006 – Tranche B USD 136m (plus accreted interest)
Dec 2004 – Tranche C USD 109m
Dec 2004 – Tranche D AUD 72m
Aug 2005 – Tranche C USD 157m
Nov 2006 – Tranche C USD 121m (plus accreted interest)
Nov 2006 – Tranche D USD 50m (plus accreted interest)
Net capitalised borrowing costs
Maturity
Carrying value
2017
$M
2016
$M
Jun 2018
Jun 2019
Nov 2017
Mar 2019
Oct 2020
Sep 2024
Aug 2025
Feb 2026
Mar 2027
Jul 2027
Nov 2016
Dec 2016
Aug 2017
Nov 2018
Dec 2019
Dec 2019
Aug 2020
Nov 2021
Nov 2026
-
33
(3)
300
250
743
892
743
715
715
117
(35)
-
-
163
236
141
72
203
211
88
(1)
62
-
(2)
300
260
746
896
746
741
-
-
(27)
77
52
169
244
146
72
211
218
91
(1)
Total corporate debt, net of capitalised borrowing costs
5,583
5,001
1. These facilities were repaid during FY17.
70
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B14 Borrowings (continued)
Financing arrangements and credit facilities (continued)
Non-recourse debt
Capital markets debt
Airport Motorway Trust – Domestic bond AUD 300m
Transurban Queensland Finance – Domestic bond AUD 250m
Transurban Queensland Finance – EMTN CHF 200m
Transurban Queensland Finance – Domestic bond AUD 200m
Transurban Queensland Finance – Domestic bond AUD 200m
Transurban Queensland Finance – EMTN CHF 175m
95 Express Lanes – Private activity bonds USD 72m
95 Express Lanes – Private activity bonds USD 170m
495 Express Lanes – Private activity bonds USD 225m
Net capitalised borrowing costs
U.S. private placement
Transurban Queensland Finance – Sep 2015 – Tranche A USD 155m
Transurban Queensland Finance – Dec 2016 – Tranche A USD 130m
Transurban Queensland Finance – Dec 2016 – Tranche D AUD 35m
Transurban Queensland Finance – Sep 2015 – Tranche B USD 230m
Transurban Queensland Finance – Dec 2016 – Tranche B USD 225m
Transurban Queensland Finance – Sep 2015 – Tranche C USD 256m
Transurban Queensland Finance – Sep 2015 – Tranche D AUD 70m
Transurban Queensland Finance – Dec 2016 – Tranche C USD 78m
Transurban Queensland Finance – Dec 2016 – Tranche E AUD 75m
Transurban Queensland Finance – Dec 2016 – Tranche F AUD 100m
Net capitalised borrowing costs
Term debt
Cross City Tunnel Trust – Term debt AUD 277m1
Transurban Queensland Finance – Term debt AUD 420m2
Hills Motorway Trust – Term debt AUD 405m
Airport Motorway Trust – Term debt AUD 225m
TQ APL Finance – Term debt AUD 475m
Transurban Queensland Finance – Term debt AUD 750m2
Cross City Tunnel Trust – Term debt AUD 278m
Transurban Queensland Finance – Capex facility AUD 820m
Hills Motorway Trust – Term debt AUD 350m
TQ APL Finance – Term debt AUD 475m
Lane Cove Tunnel Trust – Term debt AUD 160m
Lane Cove Tunnel Trust – Term debt AUD 60m
Lane Cove Tunnel Trust – Term debt AUD 40m
Lane Cove Tunnel Trust – Term debt AUD 160m
Transurban Queensland Finance – Term debt AUD 200m
Lane Cove Tunnel Trust – Term debt AUD 40m
Net capitalised borrowing costs
TIFIA loans
495 Express Lanes – Facility limit USD 589m (plus accreted interest)
95 Express Lanes – Facility limit USD 300m (plus accreted interest)
Shareholder loan notes
Loan from Transurban Queensland consortium partners – AUD 281m
Loan from Transurban Queensland consortium partners – AUD 39m
Maturity
Carrying value
2017
$M
2016
$M
Dec 2020
Dec 2021
Jun 2023
Oct 2023
Dec 2024
Nov 2026
Jul 20343
Jan 20403
Dec 2047
Sep 2025
Dec 2026
Dec 2026
Sep 2027
Dec 2028
Sep 2030
Sep 2030
Dec 2031
Dec 2031
Jan 2035
Jun 2017
Jul 2017
Mar 2018
Jul 2018
Apr 2019
Jul 2019
Dec 2019
Dec 2019
Mar 2020
Apr 2021
May 2021
May 2025
May 2028
May 2028
Apr 2030
May 2031
Oct 20473,4
Jan 20483,4
Dec 2048
Jul 2053
300
250
272
200
200
238
93
221
292
(10)
202
169
35
299
293
333
70
101
75
100
(8)
-
-
405
225
475
-
278
77
350
475
160
60
40
160
200
40
(13)
863
325
281
39
300
250
275
-
200
-
97
229
303
(9)
209
-
-
310
-
345
70
-
-
-
(5)
277
420
405
225
475
750
-
-
350
475
120
60
40
-
200
40
(26)
843
324
281
39
Total non-recourse debt, net of capitalised borrowing costs
Total debt
8,165
13,748
7,872
12,873
1. This facility was refinanced during FY17.
2. These facilities were repaid during FY17.
3. This represents the final maturity.
4. These facilities require principal repayments throughout their life, with the first such payment due at the completion of the interest capitalisation
period.
71
71
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B14 Borrowings (continued)
Working capital facilities
§ The corporate facilities are secured by first ranking charges granted by Transurban Finance Company Pty Ltd,
Transurban Finance Trust, Transurban Holdings Limited, Transurban Holding Trust, Transurban International
Limited and Transurban Limited;
§ The Transurban Queensland Finance facility is secured against the respective rights of Transurban
Queensland Holdings 1 Pty Limited, Transurban Queensland Holdings 2 Pty Limited, Transurban Queensland
Invest Trust and their assets. At 30 June 2017 the facility was undrawn; and
§ The AirportlinkM7 facility is secured against the respective rights of APL Hold Co Pty Limited, APL Co Pty
Limited, TQ APL Hold Trust, TQ APL Asset Trust and their assets. At 30 June 2017 the facility was undrawn.
Capital markets debt
§ The corporate domestic bonds are secured by first ranking charges granted by Transurban Finance Company
Pty Ltd, Transurban Finance Trust, Transurban Holdings Limited, Transurban Holding Trust, Transurban
International Limited and Transurban Limited;
§ A corporate secured EMTN program was established in October 2011 with a program limit of USD$2 billion,
which increased to USD $5 billion in May 2015. Under the program the Group may from time to time issue
notes denominated in any currency. These facilities are secured by first ranking charges granted by
Transurban Finance Company Pty Ltd, Transurban Finance Trust, Transurban Holdings Limited, Transurban
Holding Trust, Transurban International Limited and Transurban Limited;
§ The corporate US 144A notes are secured by first ranking charges granted by Transurban Finance Company
Pty Ltd, Transurban Finance Trust, Transurban Holdings Limited, Transurban Holding Trust, Transurban
International Limited and Transurban Limited;
§ The Airport Motorway Trust domestic bond is secured against the respective rights of Airport Motorway Limited
and Airport Motorway Trust and their assets;
§ The Transurban Queensland Finance domestic bonds are secured against the respective rights of Transurban
Queensland Holdings 1 Pty Limited, Transurban Queensland Holdings 2 Pty Limited, Transurban Queensland
Invest Trust and their assets;
§ A Transurban Queensland Finance EMTN program was established in March 2016 with a program limit of
USD$2 billion. Under the program, Transurban Queensland Finance may from time to time issue notes
denominated in any currency. These notes are secured against the respective rights of Transurban
Queensland Holdings 1 Pty Limited, Transurban Queensland Holdings 2 Pty Limited, Transurban Queensland
Invest Trust and their assets;
§ The 95 Express Lanes Private Activity Bonds (‘PABs’) are secured against the rights of 95 Express Lanes LLC
and its assets; and
§ The 495 Express Lanes PABs are secured against the rights of Capital Beltway Express LLC and its assets.
U.S. private placement
§ Corporate U.S. private placement facilities are secured by first ranking charges granted by Transurban Finance
Company Pty Ltd, Transurban Finance Trust, Transurban Holdings Limited, Transurban Holding Trust,
Transurban International Limited and Transurban Limited; and
§ The Transurban Queensland Finance U.S private placement facilities are secured against the respective rights
of Transurban Queensland Holdings 1 Pty Limited, Transurban Queensland Holdings 2 Pty Limited,
Transurban Queensland Invest Trust and their assets.
72
72
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B14 Borrowings (continued)
Term debt
§ The Airport Motorway facility is secured against the respective rights of Airport Motorway Limited, the Airport
Motorway Trust and their assets;
§ The Hills Motorway Trust facilities are secured against the respective rights of Hills Motorway Limited, Hills
Motorway Trust and their assets;
§ The Lane Cove Tunnel facility is secured against the respective rights of LCT-MRE Pty Limited, LCT-MRE
Trust and their assets;
§ The Cross City Tunnel facility is secured against the respective rights of Transurban CCT Pty Limited,
Transurban CCT Trust and their assets;
§ The AirportlinkM7 facility is secured against the respective rights of APL Hold Co Pty Limited, APL Co Pty
Limited, TQ APL Hold Trust, TQ APL Asset Trust and their assets; and
§ The Transurban Queensland Finance facilities are secured against the respective rights of Transurban
Queensland Holdings 1 Pty Limited, Transurban Queensland Holdings 2 Pty Limited, Transurban Queensland
Invest Trust and their assets.
Transportation Infrastructure Finance and Innovation Act (‘TIFIA’)
§ The 495 Express Lanes TIFIA facility is secured against the rights of Capital Beltway Express LLC and its
assets; and
§ The 95 Express Lanes TIFIA facility is secured against the rights of 95 Express Lanes LLC and its assets.
Shareholder loan notes
§ The loans to Transurban Queensland from the acquisition consortium partners are unsecured.
Letters of credit and corporate credit facilities
Letter of credit facility
Letter of credit facility
General credit facility1
Total
Maturity
Nov 2019
Dec 2019
Dec 2019
2017
$M
2016
$M
Facility
amount
50
240
6
296
Amount
issued
43
240
5
288
Facility
amount
60
240
4
304
Amount
issued
39
240
3
282
1. The general credit facility covers corporate requirements including credit card facilities, online banking and an overdraft facility.
Letters of credit and bank guarantees to the value of $72 million (2016: $56 million) have also been issued under
multi-option facilities and working capital facilities. All letters of credit are currently undrawn and therefore no
liability is recorded.
73
73
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B14 Borrowings (continued)
Covenants
A number of the Group's consolidated borrowings include financial covenants, which are listed below. There have
been no breaches of any of these covenants during the year.
Corporate Debt
Covenant
Senior interest coverage ratio
Group Market Capitalisation
CityLink Interest Coverage Ratio
Non-Recourse Debt
Covenant
Airport Motorway Trust Interest Coverage Ratio
Hills Motorway Trust Interest Coverage Ratio
Lane Cove Tunnel Trust Interest Coverage Ratio
Cross City Tunnel Trust Interest Coverage Ratio
Transurban Queensland Finance Interest Coverage Ratio
AirportlinkM7 Finance Interest Coverage Ratio
Threshold
Greater than 1.25 times
Gearing must not exceed 60%1
Greater than 1.1 times
Threshold
Greater than 1.15 times
Greater than 1.15 times
Greater than 1.15 times
Greater than 1.15 times
Greater than 1.20 times
Greater than 1.20 times
495 Express Lanes Senior Debt Service Coverage Ratio
95 Express Lanes Senior Debt Service Coverage Ratio2
1. Based on the balance sheet as at 30 June 2017, the Group’s average closing security price over 20 consecutive business days would need to
Greater than 1.30 times
Greater than 1.15 times
be below $4.22 (2016: $4.26) per security to trigger this clause.
2. The first relevant calculation date is in December 2017, three years from project substantial completion.
B15 Derivatives and financial risk management
Derivatives
Assets
Interest rate swap contracts – cash flow hedges
Cross-currency interest rate swap contracts – cash flow hedges
Total derivative financial instrument assets
Liabilities
Interest rate swap contracts – cash flow hedges
Forward exchange contracts – cash flow hedges
Cross-currency interest rate swap contracts – cash flow hedges
Total derivative financial instrument liabilities
2017
$M
2016
$M
Current
Non-current
Current Non-current
–
–
–
2
1
2
5
8
74
82
128
–
234
362
–
–
–
12
2
3
17
–
121
121
279
–
114
393
74
74
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B15 Derivatives and financial risk management (continued)
Accounting policy
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent
changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the
nature of the item being hedged. The Group designates certain derivatives as either:
§ hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges);
§ hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly
probable forecast transactions (cash flow hedges); or
§ hedges of a net investment in a foreign operation (net investment hedges).
At the inception of the hedging transaction the Group documents the relationship between hedging instruments
and hedged items, as well as its risk management objective and strategy for undertaking various hedge
transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of
whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in
offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative financial instruments used for hedging purposes are disclosed in this note.
Movements in the cash flow hedging reserve in shareholders' equity are shown in note B12. The full fair value of a
hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item
is more than 12 months.
Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit
or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the
hedged risk. The gain or loss relating to the effective portion of interest rate swaps and cross currency swaps
hedging fixed rate borrowings is recognised in profit or loss within finance costs, together with changes in the fair
value of the hedged fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the
ineffective portion is recognised in profit or loss.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged
item for which the effective interest method is used is amortised to profit or loss over the period to maturity using a
recalculated effective interest rate.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss
relating to the ineffective portion is recognised immediately in profit or loss.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit
or loss.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to profit or
loss.
Net investment hedges
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other
comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion
is recognised immediately in profit or loss.
Gains and losses accumulated in equity are included in profit or loss when the foreign operation is partially
disposed of or sold.
Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting are recognised immediately in profit or loss.
75
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2017 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B15 Derivatives and financial risk management (continued)
Hedging strategy and instruments used by the Group
The Group uses derivative financial instruments in the normal course of business in order to hedge exposures to
fluctuations in interest rates and foreign exchange rates in accordance with the Group’s financial risk
management policies. The Group’s policies allow derivative transactions to be undertaken for the purpose of
reducing risk and do not permit speculative trading. The instruments used by the Group are as follows:
Interest rate swap contracts – cash flow hedges
The Group uses interest rate swap contracts to manage the Group’s exposure to variable interest rates related to
borrowings. Interest rate swap contracts currently in place cover 98% (2016: 100%) of the variable debt held by
the Group (excluding working capital facilities).
Forward exchange contracts – cash flow hedges
The Group currently uses forward exchange contracts to protect against exchange rate movements between the
AUD and foreign currencies. The Group has hedged a portion of its USD interest commitments and its capital
expenditure commitments.
Cross-currency interest rate contracts – cash flow hedges
The Group has entered into cross-currency interest rate swap contracts to remove the risk of unfavourable
exchange rate movements on borrowings held in foreign currencies. Under these contracts, the Group receives
foreign currency at fixed rates and pays AUD at either fixed or floating rates. The Group then uses the interest
rate swap contracts to hedge the floating interest rate commitments back to fixed interest rates.
Offsetting financial assets and financial liabilities
Currently there is no right or basis to present any financial assets or financial liabilities on a net basis, and as such
no financial assets or financial liabilities have been presented on a net basis in the Group's balance sheet at the
end of the financial year.
Hedge of net investment in foreign entity
Transurban's investment in its US based assets (495 Express Lanes and 95 Express Lanes) acts as a natural
hedge against the exposure to foreign currency movements for a portion of the Group’s USD denominated
borrowings. Exchange differences arising on the revaluation of these USD denominated borrowings are
recognised in profit or loss in the separate financial statements of Transurban Finance Company Pty Limited. In
the Group financial statements these exchange differences are recognised in the foreign currency translation
reserve in equity and will be transferred to profit or loss when the Group disposes its interest in the US based
assets. As at 30 June 2017, the Group has deferred $43 million in losses (2016: $94 million losses).
Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and interest rate
risk), credit risk and liquidity risk. The financial risk management function is carried out centrally under the policies
approved by the Board. The Group reviews operations actively to identify and monitor all financial risks and to
mitigate these risks through the use of hedging instruments where appropriate. The Board 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. When measuring financial risk, the Group
considers positive and negative exposures, existing hedges and the ability to offset exposures where possible.
76
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B15 Derivatives and financial risk management (continued)
Market risk
Foreign exchange 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.
Foreign currency exposures are viewed as either investment exposures or operating exposures. Exposures from
investments in foreign assets are generally managed using foreign currency debt. All known material operating
exposures out to 12 months are hedged, either using hedging instruments, or are offset by drawing on foreign
currency funds.
Exposure to foreign currency risk at the reporting date, denominated in the currency in which the risk arises, was
as follows:
USD
EUR
2017
Local $M
CAD
CHF
NOK
USD
EUR
CAD
CHF
NOK
2016
Local $M
1,253
–
–
–
–
1,192
–
–
–
(3,001)
(1,600)
(250)
(375)
(750)
(2,094)
(1,600)
(250)
(200)
2,009
1,600
250
375
750
1,122
1,600
250
200
261
–
–
–
–
220
–
–
–
–
–
–
–
Net investment in foreign
operation
Borrowings
Cross-currency interest
rate swaps
Net exposure
Sensitivity
Sensitivity to exchange rate movements based on the translation of financial instruments held at the end of the
period is as follows:
AUD/USD
+ 10 cents
- 10 cents
AUD/EUR
+ 5 cents
- 5 cents
AUD/CAD
+ 10 cents
- 10 cents
AUD/CHF
+ 10 cents
- 10 cents
AUD/NOK
+ 50 cents
- 50 cents
2017
$M
2016
$M
Movement in
post-tax profit
Increase /
(decrease) in
equity
Movement in
post-tax profit
Increase /
(decrease) in
equity
–
–
–
–
–
–
–
–
–
–
(75)
104
(36)
46
(1)
1
(15)
27
(2)
2
–
–
–
–
–
–
–
–
–
–
(68)
93
(45)
58
(2)
3
(10)
17
–
–
The Group revalues its foreign currency denominated borrowings each period using market spot rates and, where
these borrowings have been appropriately hedged, defers these movements in the cash flow hedge reserve in
equity. The volatility in the cash flow hedge reserve is caused mainly by fair value movements of the cross
currency interest rate swaps, which are affected by changes in forward Australian dollar/foreign currency
exchange rates.
77
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B15 Derivatives and financial risk management (continued)
Interest rate risk
The Group’s main exposure to interest rate risk arises from cash and cash equivalents, and long-term borrowings.
The Group manages interest rate risk by entering into fixed rate debt facilities or by using interest rate swaps to
convert floating rate debt to fixed interest rates. Generally, the Group raises long term borrowings at floating
interest rates and swaps them into fixed interest rates that are lower than those available if the Group borrowed at
fixed rates directly. The Group’s policy is to hedge interest rate exposure at a minimum in compliance with the
covenant requirements of funding facilities and up to 100%. Covenant requirements vary by debt facility, and
require a minimum of between 50% and 80% of the interest rate exposure to be hedged. At 30 June 2017, 97%
(2016: 99%) of the Group’s interest rate exposure on variable rate borrowings was hedged.
As at the reporting date, the Group had the following cash balances, variable rate borrowings and interest rate
swap contracts outstanding:
Cash and cash equivalents
Floating rate borrowings
Interest rate swaps (notional principal amount)
Net exposure to interest rate risk
Sensitivity
Sensitivity to interest rate movements based on variable rate obligations is as follows:
2017
$M
988
(3,761)
3,652
879
2016
$M
834
(4,693)
4,631
772
Interest rates +100bps
Interest rates –100bps
Credit risk
Movement in post-tax profit
2017
$M
9
(9)
2016
$M
8
(8)
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. However, as an
operator of large infrastructure assets, the Group is exposed to credit risk with its financial counterparties through
entering into financial transactions through 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 objective ratings provided by
multiple independent rating agencies. The Board 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 size 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.
Liquidity risk
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 12
months) and medium term (one to five years) by maintaining accurate forecasts of operating expenses,
committed capital expenditure and payments to security holders. Long term liquidity requirements are reviewed as
part of the annual strategic planning process.
Short 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 12 month basis.
Medium term liquidity forecasting is maintained on a rolling five year horizon.
78
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B15 Derivatives and financial risk management (continued)
Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Floating rate
Expiring within one year
Expiring beyond one year
2017
$M
407
434
841
2016
$M
349
527
876
As at 30 June 2017, the Group has letter of credit facilities and general credit facilities in place with undrawn
capacity of $8 million (2016: $22 million). The facilities are committed for the term of the facility and cannot be
withdrawn by the lenders without notice.
Contractual maturities of financial liabilities
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.
2017
$M
Trade payables
Borrowings
Interest rate swaps
Cross-currency swaps
Concession and
promissory notes
Other liabilities
Total
2016
$M
Trade payables
Borrowings
Interest rate swaps
Cross-currency swaps
Concession and
promissory notes
Other liabilities
Total
1 year
or less
347
1,158
51
121
–
45
1,722
1 year
or less
410
652
81
93
–
–
1,236
Over
1 to 2
years
–
1,677
33
115
–
155
1,980
Over
1 to 2
years
–
1,738
69
80
–
45
1,932
Over
2 to 3
years
–
1,353
22
116
–
–
1,491
Over
2 to 3
years
–
1,615
55
54
–
155
1,879
Over
3 to 4
years
–
2,377
8
99
–
–
2,484
Over
3 to 4
years
–
1,677
33
74
–
–
1,784
Over
4 to 5
years
–
812
7
96
–
–
915
Over
4 to 5
years
–
2,293
18
51
–
–
2,362
Over 5
years
–
12,567
24
(440)
493
–
12,644
Over 5
years
–
11,249
78
(419)
466
–
11,374
Total
contractual
cash flows
Carrying
amount
347
19,944
145
107
493
200
21,236
347
13,748
122
163
78
186
14,644
Total
contractual
cash flows
Carrying
amount
410
19,224
334
(67)
466
200
20,567
410
12,873
291
(2)
67
177
13,816
Capital risk management
The Group is subject to a gearing ratio covenant imposed by senior secured lenders and monitors capital on the
basis of the gearing ratio to ensure compliance with the covenant. There have been no breaches of the covenant
during the current financial year. For further information refer to the Borrowings note B14.
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern and to
maintain an optimal capital structure to reduce the cost of capital, so that it can continue to provide returns to
security holders and benefits for other stakeholders.
79
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B15 Derivatives and financial risk management (continued)
Fair value measurements
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 payable on those borrowings is close to current market rates or the
borrowings are of a short-term nature. The fair values of non-current borrowings are determined based on
discounted cash flows using a current borrowing rate. They are classified as level 2 fair values in the fair value
hierarchy due to the use of observable inputs.
Fair value is categorised within the fair value hierarchy based on the lowest level of input that is significant to the
fair value measurement as a whole:
§ Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities
§ Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices)
§ Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
All of the Group’s financial instruments measured, recognised and disclosed at fair value were valued using
market observable inputs (Level 2). There were no transfers between levels during the period and there has been
no change in the valuation techniques applied.
Key estimate
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques. The Group uses its judgement to select a variety of
methods and makes assumptions that are mainly based on market conditions existing at each reporting date.
The fair value of both cross-currency interest rate swaps and interest rate swaps is calculated as the present
value of the estimated future cash flows. The fair value of forward exchange contracts is determined using
forward exchange market rates at the end of the reporting period.
80
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
Network summary
The table below summarises the key balance sheet items of the Group’s concession assets by network:
2017
$M
Melbourne
Sydney
Brisbane
GWA
Net book amount
2016
$M
Melbourne
Sydney
Brisbane
GWA
Net book amount
Equity
accounted
investment
carrying amount
Concession
assets
Assets under
construction
Goodwill
Maintenance
provision
–
654
–
–
654
2,364
5,005
7,935
2,489
17,793
855
73
85
58
1,071
1
260
205
–
466
(134)
(169)
(624)
(67)
(994)
Equity
accounted
investment
carrying amount
Concession
assets
Assets under
construction
Goodwill
Maintenance
provision
–
971
–
–
971
2,498
5,176
8,112
2,613
18,399
340
34
13
7
394
1
260
205
–
466
(128)
(158)
(599)
(45)
(930)
Non-
recourse
borrowings
–
(2,011)
(4,360)
(1,794)
(8,165)
Non-
recourse
borrowings
–
(1,810)
(4,269)
(1,793)
(7,872)
B16 Intangible assets
2017
$M
Cost
Accumulated amortisation
Net book amount
2016
$M
Cost
Accumulated amortisation
Net book amount
Concession
assets
Assets under
construction
22,639
(4,846)
17,793
1,071
–
1,071
Concession
assets
Assets under
construction
22,684
(4,285)
18,399
394
–
394
Goodwill
466
–
466
Goodwill
466
–
466
Total
24,176
(4,846)
19,330
Total
23,544
(4,285)
19,259
81
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2017 Transurban Annual Report
B16 Intangible assets (continued)
Movement in intangible assets
Opening balance 1 July 2015
Additions
Acquisition of subsidiary
Currency and other adjustments
Transfers
Amortisation charge
Net book amount 30 June 2016
Additions
Acquisition of subsidiary
Currency and other adjustments
Transfers
Amortisation charge
Net book amount 30 June 2017
Concession assets
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
Concession
assets
$M
16,716
165
1,891
78
76
(527)
18,399
–
–
(45)
–
(561)
17,793
Assets under
construction
$M
138
332
–
–
(76)
–
394
679
–
(2)
–
–
1,071
Goodwill
$M
466
–
–
–
–
–
466
–
–
–
–
–
466
Total
$M
17,320
497
1,891
78
–
(527)
19,259
679
–
(47)
–
(561)
19,330
Concession assets represent the Group's rights to operate roads under Service Concession Arrangements. All
concession assets are classified as intangible assets and are amortised on a straight line basis over the term of
the right to operate the asset.
Transurban has the right to toll the concession assets for the concession period. Extensions to the concession
period have been granted during the period for a number of individual concessions as a result of road
development projects and improvements. At the end of the concession period, all concession assets are returned
to the respective Government. The remaining terms of the right to operate are reflected below:
Melbourne – Victorian State Government
Sydney – New South Wales State Government
Brisbane – Queensland State Government and Brisbane City Council
GWA – Virginia State Government
Assets under construction
2017
Years
18
19 – 31
34 – 48
70
2016
Years
19
20 – 32
35 – 49
71
Assets under construction include upgrade works as part of the CityLink-Tulla Widening project in Melbourne,
Hills M2 – NorthConnex Integration works in Sydney, the Logan Enhancement Project and the Inner City Bypass
Project in Brisbane, and 95 Express Lanes Southern Extension in GWA. Construction costs relating to completed
works are transferred to the concession asset upon final completion of the projects.
Goodwill
Goodwill primarily relates to the Group's Sydney Network and Brisbane Network and has arisen from the
acquisition of Hills Motorway Group, Tollaust Pty Limited and the Sydney Roads Group in Sydney and the
Queensland Motorways Group in Brisbane.
82
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B16 Intangible assets (continued)
Impairment testing of goodwill and other intangible assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where
an indicator of impairment exists, the Group makes an estimate of the recoverable amount. Goodwill is tested for
impairment on an annual basis, regardless of whether an indicator of impairment exists.
Recoverable amount is the greater of fair value less costs to sell and value in use. For the purpose of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
Where the carrying amount of an intangible asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount through profit or loss. The decrement in the carrying
amount is recognized as an expense in profit or loss in the reporting period in which the impairment occurs.
The recoverable amount of the Group’s cash generating units have been determined based on value-in-use
calculations.
The following table sets out the key assumptions on which management has based its cash flow projections. The
calculations use 3 year cash flow projections based on financial budgets reviewed by the Board. Cash flows
beyond this period are modelled using a consistent set of long-term assumptions up to the end of the applicable
concession period:
Long term CPI (% annual growth)
Long term average weekly earnings (% annual
growth)
Pre-tax discount rate (%)
Melbourne
Sydney
Brisbane
GWA
2017
2016
2017
2016
2017
2016
2017
2016
2.5%
2.5%
2.5%
2.5%
2.7%
2.7%
2.5%
2.5%
3.5%
4.0%
3.5%
4.0%
3.5%
4.0%
3.0%
3.0%
8.2%
8.2%
8.2%
8.2%
8.2%
8.2%
8.2%
8.2%
Management has determined the values assigned to each of the above key assumptions as follows:
Assumption
Traffic volume
Approach used to determine values
Based on historical trends and the Group’s long term traffic forecasting
models
Long term CPI (% annual growth)
Based on independent external forecasts
Long term average weekly earnings
(% annual growth)
Pre-tax discount rate
Based on independent external forecasts
Discount rates consider specific risks relating to the CGU. In
performing the value-in-use calculations for each CGU, the Group has
applied post-tax discount rates to discount the forecast future
attributable post tax cash flows. The equivalent pre-tax discount rates
are disclosed in the table above.
Key estimate
The Group makes certain assumptions in calculating the recoverable amount of its goodwill and other
intangible assets. These include assumptions around expected traffic flows and forecast operational costs.
In performing the value-in-use calculation, the Group has applied the assumptions noted in the above table.
Management does not consider that any reasonable possible change in the assumptions will result in the
carrying value of a CGU exceeding its recoverable amount.
83
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2017 Transurban Annual Report
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2017 Transurban Annual ReportTransurban Holdings Limited Notes to the consolidated financial statements for the year ended 30 June 2017 84 B17 Maintenance provision Movement in maintenance provision Current $M Non-current $M Carrying value at 1 July 2015 82 733 Additional provision recognised 97 – Acquisition of subsidiary 4 20 Amounts paid/utilised (50) – Unwinding of discount – 41 Transfer (42) 42 Movement in foreign exchange 3 – Carrying value at 30 June 2016 94 836 Additional provision recognised 103 – Amounts paid/utilised (78) – Unwinding of discount – 38 Transfer (21) 21 Movement in foreign exchange 1 – Carrying value at 30 June 2017 99 895 Key estimate As part of its obligations under the service concession arrangements, the Group assumes responsibility for the maintenance and repair of installations of the publicly owned roads it operates. The Group records a provision for its present obligation to maintain the motorways held under concession deeds. The provision is included in the financial statements at the present value of expected future payments. The calculations to discount these amounts to their present value are based on the estimated timing and profile of expenditure occurring on the roads. B18 Other liabilities – concession and promissory notes 2017 $M 2016 $M M1 Eastern Distributor concession note 40 33 M2 Motorway promissory note 38 34 Total 78 67 Key estimate The Group has non-interest bearing long term debt, represented by promissory notes and concession notes payable to the Government, measured at the present value of expected future payments. The calculations to discount these notes to their present value are based on the estimated timing and profile of the repayments. Assumptions are made in determining the timing and profile, based on expected available equity cash flows of the Group's cash generating units. A discount rate is used to value the promissory notes and concession notes to their present value, which is determined through reference to other facilities in the market with similar characteristics. A discount rate of 12% (2016: 12%) has been used, which recognises the subordinated nature of these notes. Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B18 Other liabilities – concession and promissory notes (continued)
M1 Eastern Distributor
The Eastern Distributor project deed between Airport Motorway Limited, Airport Motorway Trust and the New
South Wales Roads and Maritime Services (‘RMS’) provides for annual concession fees of $15 million during the
construction phase and for the first 24 years after completion of construction of the M1 Eastern Distributor. Until a
certain threshold return is achieved, payments of concession fees due under the Project Deed will be satisfied by
means of the issue of non-interest bearing concession notes.
The face value of concession notes on issue at 30 June 2017 is $300 million (2016: $285 million).
M2 Motorway
The Hills Motorway Trust has entered into leases with the RMS. Annual lease liabilities under these leases total
$12 million (2016: $11 million), indexed annually to the consumer price index over the estimated period that the
M2 Motorway will be used. Until such time as a threshold return is achieved, payments under these leases can be
made at any time at the discretion of the trustee of the Hills Motorway, by means of the issue of non-interest
bearing promissory notes to the RMS.
The face value of promissory notes on issue at 30 June 2017 is $193 million (2016: $181 million).
85
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
Group structure
B19 Principles of consolidation
Subsidiaries
Subsidiaries are fully consolidated from the date the Group gains control of the subsidiary and are de-
consolidated from the date that control ceases.
In preparing the consolidated financial statements of the Group, all inter-entity transactions and balances have
been eliminated. The accounting policies adopted by the individual entities comprising the Group are consistent
with the parent company.
Non-controlling interests consist of two components:
§ Non-controlling interest – other: external non-controlling interests relating to Transurban Queensland and
Eastern Distributor in the results and equity of subsidiaries are shown separately in the Group financial
statements.
§ Non-controlling interests that relate to THT and TIL are presented separately, but relate to equity
holders of the stapled group.
Associates and joint ventures
Associates are all entities over which the Group has significant influence but not control and relate to the Group’s
investments in Interlink M5 and the NorthWestern Roads Group (which holds the Westlink M7 and NorthConnex
assets).
The Group's share of the post-acquisition profits or losses in associates is recognised in profit or loss and its
share of post-acquisition movements in reserves is recognised in other comprehensive income. These post-
acquisition movements are adjusted against the carrying amount of the investment. When the Group’s cumulative
share of losses in an associate exceeds its investment in the asset, the Group does not recognise any further
losses from this point. Dividends received from the assets listed above reduce the carrying amount of the
investment.
Changes in ownership interest
The Group treats transactions with non-controlling interests that do not result in a loss of control, as transactions
with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any
difference between the amount of the adjustment to non-controlling interests and any consideration paid or
received is recognised in a separate reserve within equity.
86
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B20 Material subsidiaries
The Group’s material subsidiaries are outlined in the Group structure diagram below.
1. Acquisition of AirportlinkM7 occurred on 1 April 2016.
B21 Business combinations
Accounting policy
Business combinations are accounted for using the acquisition method. The consideration transferred for the
acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. The consideration transferred also includes the fair value of any contingent
consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-
related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions, measured initially at their fair values at the
acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the
acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net identifiable
assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group's share of
the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the
difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing
rate, being the rate at which a similar borrowing could be obtained from an independent financier under
comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
87
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B21 Business combinations (continued)
AirportlinkM7
The financial statements for the year ended 30 June 2016 included disclosure of the provisional fair values of the
identifiable assets and liabilities of the AirportlinkM7 concession acquired on 1 April 2016. The fair values were
provisional at 30 June 2016 due to the complexity of the valuation process. Subsequent to 30 June 2016,
management has made the following adjustments to the business combination accounting.
Cash and cash equivalents
Trade and other receivables
Deferred tax assets
Intangible assets
Trade and other payables
Provisions
Total identified assets acquired
Provisional fair value
reported at 30 Jun 2016
$M
Adjustments to
provisional fair value
$M
Final fair value
$M
1
2
4
1,880
(3)
(14)
1,870
-
(1)
-
11
-
(10)
-
1
1
4
1,891
(3)
(24)
1,870
B22 Equity accounted investments
Below is the reconciliation of the equity accounted carrying value of investments:
Opening carrying value 1 July
Group’s share of net profits
Group’s recognised share of other
comprehensive income1
Dividends received
Closing carrying value
NorthWestern Roads Group
M5 Motorway
Total
2017
$M
778
–
–
(290)
488
2016
$M
872
–
–
(94)
778
2017
$M
193
25
8
(60)
166
2016
$M
220
17
(11)
(33)
193
2017
$M
971
25
8
(350)
654
2016
$M
1,092
17
(11)
(127)
971
Cumulative losses not recognised1
1. 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
591
591
526
526
–
–
utilised.
Joint ventures
NorthWestern Roads Group (50% ownership interest)
The Group has a 50% ownership interest in the NorthWestern Roads Group, which holds 100% of the Westlink
M7 Group and the NorthConnex Group. Westlink M7 holds the concession to design, construct, finance and
operate the Westlink M7 Motorway in Sydney for a period of 43 years from the date of operation (16 December
2005) until June 2048, and NorthConnex holds the concession to design, construct, finance and operate the
NorthConnex Tunnel in Sydney until 2048.
The following entities are a part of the Westlink Group:
§ WSO Co Pty Limited (the operator of the Motorway).
§ Westlink Motorway Limited (the nominee manager of the Westlink Motorway Partnership).
§ WSO Finance Pty Limited (the financier of the Motorway).
§ Westlink Motorway Partnership (was responsible for the construction of the Motorway).
The following entities are part of the NorthConnex Group:
§ NorthConnex Company Pty Limited (the operator of the Motorway).
§ NorthConnex Finance Company Pty Limited (the financier of the Motorway).
§ NorthConnex State Works Contractor Pty Limited (was responsible for the construction of the Motorway).
88
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B22 Equity accounted investments (continued)
M5 Motorway (50% ownership interest)
Tolls are collected on the M5 in both directions, with four toll collection points. The concession for the M5
Motorway was extended to December 2026 following completion of the M5 widening. At the end of the
concession, all concession assets will be returned to the NSW State Government.
Summarised financial information of equity accounted investments
Set out below is the summarised financial information for those investments accounted for using the equity
method. The summarised financial information presented below is on a 100 per cent basis for each equity
accounted investment.
NorthWestern Roads Group
M5 Motorway
Total
Summarised balance sheet – 100%
Cash and cash equivalents
Other current assets
Non-current assets
Current liabilities
Non-current liabilities
Net (liabilities)/assets
Summarised statement of
comprehensive income – 100%
Revenue
Construction revenue
Depreciation and amortisation
Other expenses
Construction expenses
Interest expense
Income tax benefit/(expense)
Profit/(loss)
Other comprehensive income
Total comprehensive income
2017
$M
123
127
3,156
(498)
(3,094)
(186)
401
135
(81)
(65)
(135)
(196)
6
65
58
123
2016
$M
84
50
3,086
(325)
(2,668)
227
343
135
(81)
(54)
(135)
(145)
(12)
51
11
62
2017
$M
136
20
378
(87)
(927)
(480)
282
–
(43)
(39)
–
(45)
(50)
105
16
121
2016
$M
111
19
419
(84)
(946)
(481)
261
–
(43)
(39)
–
(48)
(43)
88
(23)
65
2017
$M
2016
$M
259
147
3,534
(585)
(4,021)
(666)
195
69
3,505
(409)
(3,614)
(254)
683
135
(124)
(104)
(135)
(241)
(44)
170
74
244
604
135
(124)
(93)
(135)
(193)
(55)
139
(12)
127
The following table reconciles the above summarised financial information presented on a 100 per cent basis to the proportional
amounts recognised by the Group
Ownership interest
Proportional total comprehensive
income
Amortisation of fair value uplift
Group's share of comprehensive
income
Profits not recognised
Group's recognised share of total
comprehensive income
Group's share of dividends/distributions
received
50%
61
–
61
(61)
–
290
50%
31
–
31
(31)
–
94
50%
60
(27)
33
–
33
60
50%
33
(27)
6
–
6
33
50%
121
(27)
94
(61)
33
350
50%
64
(27)
37
(31)
6
127
89
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B23 Non-controlling interests – other
Set out below is summarised financial information for each material subsidiary (see note B20) that has non-
controlling interests (NCI) that are material and external to the stapled Group and the total external non-controlling
interest. The amounts disclosed are before inter-company eliminations.
Summarised balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Carrying amount of NCI
Summarised statement of
comprehensive income
Revenue
Expenses
(Loss)/profit for the year
Other comprehensive income (OCI)
Total comprehensive income
(Loss)/profit allocated to NCI
OCI allocated to NCI
Summarised cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net (decreases)/increases in cash
and cash equivalents
Transurban Queensland
37.5%
Airport Motorway
24.9%
Total non-controlling
interests
2017
$M
132
8,933
(195)
(5,662)
3,208
1,204
619
(718)
(99)
20
(79)
(37)
7
33
(74)
(81)
(122)
2016
$M
244
9,069
(283)
(5,549)
3,481
1,305
512
(731)
(219)
(70)
(289)
(82)
(26)
118
(2,006)
2,027
139
2017
$M
8
1,701
(215)
(1,093)
401
100
136
(107)
29
7
36
7
2
71
–
(73)
(2)
2016
$M
10
1,740
(211)
(1,099)
440
110
127
(107)
20
4
24
5
1
60
–
(59)
1
2017
$M
140
10,634
(410)
(6,755)
3,609
1,312
755
(825)
(70)
27
(43)
(30)
9
104
(74)
(154)
(124)
2016
$M
254
10,809
(494)
(6,648)
3,921
1,423
639
(838)
(199)
(66)
(265)
(77)
(25)
178
(2,006)
1,968
140
B24 Deed of cross and intra-group guarantees
Deed of cross guarantee
Transurban Holdings Limited, Transurban Limited, Tollaust Pty Limited, Roam Tolling Pty Limited, Sydney Roads
Limited, Sydney Roads Management Limited, Statewide Roads Limited, M4 Holdings No. 1 Pty Limited, M5
Holdings Pty Limited and Devome Pty Limited are party to a deed of cross guarantee under which each company
guarantees the debts of the others. By entering into the deed, the wholly-owned entities have been relieved from
the requirement to prepare a financial report and Directors’ report under Instrument 2016/785 issued by the
Australian Securities and Investments Commission. The companies represent a 'closed group' for the purposes of
the Instrument, and as there are no other parties to the deed of cross guarantee that are controlled by THL, they
also represent the 'extended closed group’.
Set out on the next page is the summary financial information of the closed group:
90
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2017 Transurban Annual Report
B24 Deed of cross and intra-group guarantees (continued)
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
Summarised statement of comprehensive income
Revenue
Operating costs
Depreciation and amortisation expense
Net finance costs
Profit before income tax
Income tax benefit
Profit for the year
Total comprehensive income for the year
Summarised movements in retained earnings
Accumulated losses at the beginning of the year
Profit for the year
Dividends provided for or paid
Retained earnings at the end of the year
Summarised balance sheet
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Payables
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Other reserves
Retained earnings
Total equity
Intra–group guarantees
2017
$M
425
(245)
(58)
(101)
21
69
90
90
(403)
90
(144)
(457)
374
2,941
3,315
2,187
296
81
454
3,018
6,333
4,918
103
5,021
299
11
8
318
5,339
994
1,450
1
(457)
994
2016
$M
578
(208)
(47)
(22)
301
59
360
360
(624)
360
(139)
(403)
63
2,225
2,288
2,384
248
–
496
3,128
5,416
4,249
95
4,344
17
22
13
52
4,396
1,020
1,422
1
(403)
1,020
As at 30 June 2017, the Transurban Group comprises Transurban Holdings Limited, Transurban Holding Trust
and Transurban International Limited, traded and quoted on the ASX as one triple stapled security. Under the
stapling arrangement, each entity is able to provide direct and/or indirect support to each other entity and its
controlled entities within the Group on a continual basis.
91
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
Items not recognised
B25 Contingencies
Contingent liabilities
Contingent consideration
As a result of the acquisition of the concession assets noted below, the Group may be required to make further
payments to the respective vendors in the event that the traffic and toll revenue performance of the relevant asset
exceeds certain criteria. The contingent consideration is recorded at the end of each reporting period at its fair
value based upon the same traffic and revenue assumptions as outlined in note B16. The following table details
the current carrying value of the contingent consideration recognised within ‘Other provisions’ in the consolidated
balance sheet, the maximum nominal value that could be paid under each contract and the date at which the
contingent consideration is assessed and becomes payable:
Cross City Tunnel
Legacy Way Tunnel
Go-Between Bridge
Carrying
value
$M
Maximum
consideration
payable
$M
Assessment
/ payment
date
–
89
1
28
Unlimited1
Unlimited1
Dec 2017
Jun 2020
Jun 2018
1. The maximum consideration payable will reflect a portion of the cumulative outperformance of the concession asset as compared against an
internal rate of return agreed between Transurban Queensland and the Brisbane City Council.
Other contingent liabilities
As part of the Inner City Bypass (ICB) project an increase to the truck toll multiplier is scheduled to be applied to
the Brisbane City Council (BCC) Assets. This requires approval from the Queensland State Government before
the change to the multiplier can take effect. This could result in a payment being made by Transurban to the BCC
of up to $15 million.
As at 30 June 2017, approval of the multiplier increase has not been received or denied from the State, and as
such no payment amount has been recorded.
Parent entity
The parent entity does not have any contingent liabilities at reporting date (2016: nil).
Equity accounted investments
The equity accounted investments of the Group do not have any contingent liabilities at reporting date (2016: nil).
B26 Commitments
Within one year
Later than one year but not later
than five years
Later than five years
Operating
commitments
2017
$M
166
322
139
627
2016
$M
121
312
207
640
Capital
commitments
2017
$M
514
168
–
682
2016
$M
499
200
–
699
Operating lease
commitments
2017
$M
6
22
14
42
2016
$M
5
22
20
47
Share of commitments for equity accounted investments
NorthWestern Roads Group
50%
M5 Motorway
50%
Capital commitments
Operating commitments
92
2017
$M
1
2
3
2016
$M
–
2
2
2017
$M
859
331
1,190
2016
$M
1,078
419
1,497
92
Total
2017
$M
860
333
1,193
2016
$M
1,078
421
1,499
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B27 Subsequent events
The following events have occurred subsequent to year end:
§ On 4 July 2017, Transurban Finance Company reached contractual close on a new $1,100 million corporate
Syndicated Bank Debt Facility, broken down into three tranches of $360 million, $375 million and $365 million.
In addition, $225 million of corporate bilateral letter of credit facilities also closed on this date. Financial close
was reached on 7 July 2017. These facilities replaced the existing $900 million bilateral working capital
facilities and will provide extra liquidity headroom.
§ On 26 July 2017, the Group reached financial close on the US$475 million 395 Express Lanes project.
Financing for the project includes approximately US$233 million in private activity bonds (par amount), which
settled in July, and a US$45 million loan from the Virginia Transportation Infrastructure Bank. Construction of
the project commenced in July 2017 and is expected to be complete in late 2019.
Other than what is noted above and as disclosed elsewhere in this report, there has not arisen in the interval
between the end of the financial year and the date of this report any matter or circumstance that has significantly
affected, or may significantly affect, the Group’s operations, the results of those operations, or Group’s state of
affairs, in future financial years.
93
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2017 Transurban Annual Report
Other
B28 Related party transactions
Transactions with related parties
Revenue from services
Interest income
Outstanding balances with related parties
Held-to-maturity investments
M5 debt notes
NorthConnex shareholder loan notes
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
Joint ventures
2017
$’000
17,501
42,490
2016
$’000
14,657
23,283
70,000
516,069
586,069
70,000
298,964
368,964
No provision for doubtful debts has been raised in relation to any outstanding balances, and no expense has been
recognised in respect of bad or doubtful debts from related parties.
Transactions with related parties
Revenue for services
Revenue relates to tolling services provided to related parties.
Interest income
Interest income relates to interest earned on held to maturity investments as noted below.
Held to maturity investments
M5 debt notes
The M5 debt notes are Transurban’s debt funding contribution to the M5 West Widening Project. The fixed
maturity date of the notes is 10 years after financial close of the Project. The interest rate charged on these notes
is currently fixed at 5.0%.
NorthConnex shareholder loan notes
The Shareholder loan notes (‘SLNs’) earn interest at a fixed rate of 9.0% until the final day of the NorthConnex
concession period. Any 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 held-to-maturity receivable. They are not classified as an investment for equity
accounting purposes, and therefore has not been affected by equity accounting losses from the associate. All
SLNs are denominated in Australian currency.
B29 Key management personnel compensation
The remuneration amounts below represent the entire amounts paid by the Group.
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Deferred short term incentives
2017
$
2016
$
12,988,993
315,264
155,992
5,343,402
3,266,154
22,069,805
12,204,487
289,149
55,829
5,371,997
2,980,450
20,901,912
Detailed remuneration disclosures including the key management personnel are made in the remuneration report
in the Directors' report.
94
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2017 Transurban Annual Report
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2017
B30 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the Group and its
related practices:
Amounts received or due and receivable by PricewaterhouseCoopers
Audit and other assurance services
Audit and review of financial reports
Other assurance services
Other consulting services
Total remuneration for PricewaterhouseCoopers
Total auditors remuneration
B31 Parent entity disclosures
2017
$
2016
$
2,237,470
725,730
2,963,200
–
2,963,200
2,963,200
2,190,000
444,300
2,634,300
–
2,634,300
2,634,300
The financial information for the parent entity, Transurban Holdings Limited, has been prepared on the same
basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are accounted for at cost in the parent entity financial
statements of Transurban Holdings Limited. Dividends received from associates are recognised in the parent
entity's profit or loss, rather than being deducted from the carrying amount of these investments.
Tax consolidation legislation
In addition to its own current and deferred tax amounts, Transurban Holdings Limited 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.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as
amounts receivable from or payable to other entities in the Group. Any difference between the amounts assumed
and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or
distribution from) wholly owned tax consolidated entities.
Summary financial information
The individual financial statements for the parent entity report the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholders' equity
Contributed equity
Reserves
Retained earnings
Total equity
Profit for the year
Total comprehensive income
2017
$M
2,464
5,542
(24)
(3,826)
1,716
1,450
2
264
1,716
113
113
2016
$M
2,259
5,868
(124)
(4,149)
1,719
1,422
1
296
1,719
376
376
Guarantees entered into by the parent entity
There are cross guarantees given by Transurban Holdings Limited, Transurban Limited, Tollaust Pty Limited,
Roam Tolling Pty Limited, Sydney Roads Limited, Sydney Roads Management Limited, Statewide Roads Limited,
M4 Holdings No 1 Pty Limited, M5 Holdings Pty Limited and Devome Pty Limited as described in note B24.
95
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
for the year ended 30 June 2017
Section C: Transurban Holding Trust (‘THT’)
and Transurban International Limited (‘TIL’)
financial statements
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Section D: Notes to the THT and TIL financial statements
Basis of
preparation and
significant
changes
Operating
performance
D1
Introduction
D3
Segment
information
D2
Trust formation and
termination
D4
Revenue
D5
Income tax
Security holder
outcomes
D6
Distributions
D7
Earnings per
stapled security
Capital and
borrowings
D8
Reserves
D9
Net finance costs
D10
Borrowings
Network summary D12
Intangible assets
Group structure D14
Equity accounted
investments
D13
Other liabilities –
concession and
promissory notes
D15
Non-controlling
interests
Other
D16
Related party
transactions
D17
Parent entity
financial information
D11
Derivatives and
financial risk
management
96
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Consolidated statement of comprehensive income
for the year ended 30 June 2017
Transurban Holding Trust and Transurban International Limited
Consolidated statement of comprehensive income
for the year ended 30 June 2017
Transurban International
Limited
Transurban Holding
Trust
Revenue
Employee benefits expense
Road operating costs
Revenue
Construction costs
Transaction and integration costs
Employee benefits expense
Corporate and other expenses
Road operating costs
Total expenses
Construction costs
Transaction and integration costs
Earnings before depreciation and amortisation,
Corporate and other expenses
net finance costs, equity accounted
Total expenses
investments and income tax
Earnings before depreciation and amortisation,
Depreciation and amortisation expense
net finance costs, equity accounted
Net finance costs
investments and income tax
Profit/(loss) before income tax
Depreciation and amortisation expense
Net finance costs
Income tax benefit/(expense)
Profit/(loss) for the year
Profit/(loss) before income tax
Profit/(loss) is attributable to:
Income tax benefit/(expense)
Ordinary security holders of TIL
Profit/(loss) for the year
Ordinary unit holders of THT
Non–controlling interests
Profit/(loss) is attributable to:
Ordinary security holders of TIL
Other comprehensive income
Ordinary unit holders of THT
Items that may be reclassified to profit or loss
Non–controlling interests
Changes in the fair value of cash flow hedges,
net of tax
Other comprehensive income
Exchange differences on translation of foreign
Items that may be reclassified to profit or loss
operations, net of tax
Changes in the fair value of cash flow hedges,
Movement in share-based payments reserve
net of tax
Other comprehensive income for the year,
Exchange differences on translation of foreign
net of tax
operations, net of tax
Total comprehensive income for the year
Movement in share-based payments reserve
Other comprehensive income for the year,
Total comprehensive income for the year is
net of tax
attributable to:
Total comprehensive income for the year
Ordinary security holders of TIL
Ordinary unit holders of THT
Total comprehensive income for the year is
Non-controlling interests
attributable to:
Ordinary security holders of TIL
Ordinary unit holders of THT
Non-controlling interests
Earnings per security attributable to ordinary
security holders of the group:
Basic and diluted earnings/(loss) per security
Earnings per security attributable to ordinary
security holders of the group:
Basic and diluted earnings/(loss) per security
Note
D4
Note
D4
D9
D9
D15
D15
D7
D7
2017
$M
Transurban Holding
Trust
2016
$M
2016
2017
Transurban International
$M
$M
Limited
764
2017
$M
–
(2)
764
(87)
–
–
(2)
(2)
(91)
(87)
–
(2)
673
(91)
(310)
673
(161)
202
(310)
(161)
–
202
202
–
–
202
207
(5)
202
–
207
(5)
202
56
–
56
1
57
–
259
1
57
259
–
255
4
259
–
255
Cents
4
259
10.1
Cents
641
2016
$M
–
(4)
641
(35)
(98)
–
(1)
(4)
(138)
(35)
(98)
(1)
503
(138)
(276)
503
(53)
174
(276)
(53)
(1)
173
174
(1)
–
173
209
(36)
173
–
209
(36)
173
(75)
–
(75)
–
(75)
–
98
–
(75)
98
–
159
(61)
98
–
159
Cents
(61)
98
10.5
Cents
233
2017
$M
(20)
(63)
233
(24)
–
(20)
(14)
(63)
(121)
(24)
–
(14)
112
(121)
(40)
112
(164)
(92)
(40)
(164)
41
(51)
(92)
41
(51)
(51)
–
–
(51)
(51)
–
–
(51)
16
20
16
–
36
20
(15)
–
36
(15)
(15)
–
–
(15)
(15)
–
Cents
–
(15)
(2.5)
Cents
174
2016
$M
(16)
(60)
174
–
–
(16)
(12)
(60)
(88)
–
–
(12)
86
(88)
(37)
86
(234)
(185)
(37)
(234)
31
(154)
(185)
31
(154)
(154)
–
–
(154)
(154)
–
–
(154)
(20)
(11)
(20)
–
(31)
(11)
(185)
–
(31)
(185)
(185)
–
–
(185)
(185)
–
Cents
–
(185)
(7.8)
Cents
10.1
10.5
(2.5)
(7.8)
The above consolidated statements of comprehensive income should be read in conjunction with the
accompanying notes.
The above consolidated statements of comprehensive income should be read in conjunction with the
accompanying notes.
97
97
97
TUIR026_Annual_Report_2017_inner_spreads_art02_sp.indd 97
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Consolidated balance sheet
for the year ended 30 June 2017
Transurban Holding Trust and Transurban International Limited
Consolidated balance sheet
Transurban International
for the year ended 30 June 2017
Limited
Transurban Holding
Trust
ASSETS
Current assets
Cash and cash equivalents
Loans to related parties
ASSETS
Trade and other receivables
Current assets
Held-to-maturity investments
Cash and cash equivalents
Total current assets
Loans to related parties
Trade and other receivables
Held-to-maturity investments
Non-current assets
Equity accounted investments
Total current assets
Derivative financial instruments
Related party receivables
Non-current assets
Concession notes
Equity accounted investments
Property, plant and equipment
Derivative financial instruments
Deferred tax assets
Related party receivables
Intangible assets
Concession notes
Total non-current assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total assets
Total non-current assets
LIABILITIES
Current liabilities
Total assets
Related party payables
Trade and other payables
LIABILITIES
Borrowings
Current liabilities
Maintenance provision
Related party payables
Distribution payable
Trade and other payables
Derivative financial instruments
Borrowings
Other liabilities
Maintenance provision
Total current liabilities
Distribution payable
Derivative financial instruments
Other liabilities
Non–current liabilities
Maintenance provision
Total current liabilities
Deferred tax liabilities
Related party payables
Non–current liabilities
Borrowings
Maintenance provision
Derivative financial instruments
Deferred tax liabilities
Other liabilities
Related party payables
Borrowings
Total non–current liabilities
Derivative financial instruments
Other liabilities
Total liabilities
Total non–current liabilities
Net assets/(liabilities)
Total liabilities
EQUITY
Contributed equity
Net assets/(liabilities)
Issued units
Reserves
EQUITY
Accumulated losses
Contributed equity
Non-controlling interests
Issued units
Total equity
Reserves
Accumulated losses
Non-controlling interests
Total equity
Note
Note
D14
D11
D14
D11
D5
D12
D5
D12
D10
D6
D11
D10
D6
D11
D5
D10
D11
D5
D10
D11
D8
D15
D8
D15
2017
$M
Transurban Holding
Trust
2016
$M
2017
$M
102
1,923
2
–
102
2,027
1,923
2
–
478
2,027
8
7,452
946
478
–
8
34
7,452
9,700
946
18,618
–
34
20,645
9,700
18,618
20,645
640
55
405
–
640
522
55
1
405
67
–
1,690
522
1
67
–
1,690
–
5,162
5,648
–
132
–
81
5,162
11,023
5,648
132
12,713
81
11,023
7,932
12,713
–
7,932
10,665
(44)
(3,836)
–
1,147
10,665
7,932
(44)
(3,836)
1,147
7,932
2016
$M
229
2,377
2
–
229
2,608
2,377
2
–
768
2,608
–
5,966
961
768
–
–
41
5,966
9,920
961
17,656
–
41
20,264
9,920
17,656
20,264
266
142
276
–
266
446
142
11
276
44
–
1,185
446
11
44
–
1,185
–
4,835
5,483
–
148
–
89
4,835
10,555
5,483
148
11,740
89
10,555
8,524
11,740
–
8,524
10,520
(92)
(3,132)
–
1,228
10,520
8,524
(92)
(3,132)
1,228
8,524
2016
2017
Transurban International
$M
$M
Limited
2017
$M
167
–
20
157
167
344
–
20
157
–
344
–
–
–
–
12
–
363
–
2,547
–
2,922
12
363
3,266
2,547
2,922
3,266
1,591
48
12
1
1,591
–
48
–
12
6
1
1,658
–
–
6
66
1,658
266
–
1,780
66
59
266
1
–
2,172
1,780
59
3,830
1
2,172
(564)
3,830
309
(564)
–
(140)
(733)
309
–
–
(564)
(140)
(733)
–
(564)
2016
$M
245
8
16
–
245
269
8
16
–
–
269
–
–
–
–
4
–
352
–
2,620
–
2,976
4
352
3,245
2,620
2,976
3,245
1,560
29
–
3
1,560
–
29
–
–
5
3
1,597
–
–
5
42
1,597
282
–
1,793
42
87
282
–
–
2,204
1,793
87
3,801
–
2,204
(556)
3,801
302
(556)
–
(176)
(682)
302
–
–
(556)
(176)
(682)
–
(556)
The above consolidated balance sheets should be read in conjunction with the accompanying notes.
The above consolidated balance sheets should be read in conjunction with the accompanying notes.
98
98
98
TUIR026_Annual_Report_2017_inner_spreads_art02_sp.indd 98
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Transurban Holding Trust and Transurban International Limited
Consolidated statement of changes in equity
Consolidated statement of changes in equity
for the year ended 30 June 2017
for the year ended 30 June 2017
Total
Total
equity
equity
$M
$M
7,979
7,979
173
173
(75)
(75)
98
98
1,153
1,153
2
2
(762)
(762)
112
112
(58)
(58)
446
446
8,524
8,524
202
202
57
57
259
259
3
3
(911)
(911)
142
142
(85)
(85)
(851)
(851)
7,932
7,932
THT
THT
M
M
Attributable to security holders of
Attributable to security holders of
Transurban Holding Trust
Transurban Holding Trust
No. of
No. of
securities
securities
No. of
No. of
units
units
M
M
Issued units
Issued units
$M
$M
Reserves
Reserves
$M
$M
Accumulated
Accumulated
losses
losses
$M
$M
Non-
Non-
controlling
controlling
interests
interests
$M
$M
Balance at 1 July 2015
Balance at 1 July 2015
Comprehensive income
Comprehensive income
Profit for the year
Profit for the year
Other comprehensive income
Other comprehensive income
Total comprehensive income
Total comprehensive income
Contributions of equity, net of
Contributions of equity, net of
transaction costs
transaction costs
Employee share awards issued
Employee share awards issued
Distributions
Distributions
Distribution reinvestment plan
Distribution reinvestment plan
Distributions to NCI
Distributions to NCI
Balance at 30 June 2016
Balance at 30 June 2016
Comprehensive income
Comprehensive income
Profit for the year
Profit for the year
Other comprehensive income
Other comprehensive income
Total comprehensive income
Total comprehensive income
Employee share awards issued
Employee share awards issued
Distributions
Distributions
Distribution reinvestment plan
Distribution reinvestment plan
Distributions to NCI
Distributions to NCI
Balance at 30 June 2017
Balance at 30 June 2017
1,914
1,914
–
–
–
–
–
–
107
107
1
1
–
–
14
14
–
–
122
122
2,036
2,036
–
–
–
–
–
–
1
1
–
–
15
15
–
–
16
16
2,052
2,052
TIL
TIL
M
M
No. of
No. of
securities
securities
No. of
No. of
securities
securities
M
M
Balance at 1 July 2015
Balance at 1 July 2015
Comprehensive income
Comprehensive income
Loss for the year
Loss for the year
Other comprehensive income
Other comprehensive income
Total comprehensive income
Total comprehensive income
Contributions of equity, net of
Contributions of equity, net of
transaction costs
transaction costs
Employee share awards issued
Employee share awards issued
Distribution reinvestment plan
Distribution reinvestment plan
Balance at 30 June 2016
Balance at 30 June 2016
Comprehensive income
Comprehensive income
Loss for the year
Loss for the year
Other comprehensive income
Other comprehensive income
Total comprehensive income
Total comprehensive income
Employee share awards issued
Employee share awards issued
Distribution reinvestment plan
Distribution reinvestment plan
Balance at 30 June 2017
Balance at 30 June 2017
1,914
1,914
–
–
–
–
–
–
107
107
1
1
14
14
122
122
2,036
2,036
–
–
–
–
–
–
1
1
15
15
16
16
2,052
2,052
9,584
9,584
–
–
–
–
–
–
823
823
1
1
–
–
112
112
–
–
936
936
10,520
10,520
–
–
–
–
–
–
3
3
–
–
142
142
–
–
145
145
10,665
10,665
(43)
(43)
–
–
(50)
(50)
(50)
(50)
–
–
1
1
–
–
–
–
–
–
–
–
(92)
(92)
–
–
48
48
48
48
–
–
–
–
–
–
–
–
–
–
(44)
(44)
(2,579)
(2,579)
209
209
–
–
209
209
–
–
–
–
(762)
(762)
–
–
–
–
(762)
(762)
(3,132)
(3,132)
207
207
–
–
207
207
–
–
(911)
(911)
–
–
–
–
(911)
(911)
(3,836)
(3,836)
Attributable to security holders of
Attributable to security holders of
Transurban International Limited
Transurban International Limited
Contributed
Contributed
equity
equity
$M
$M
Accumulated
Accumulated
losses
losses
$M
$M
Reserves
Reserves
$M
$M
(145)
(145)
–
–
(31)
(31)
(31)
(31)
–
–
–
–
–
–
–
–
(176)
(176)
–
–
36
36
36
36
–
–
–
–
–
–
(140)
(140)
279
279
–
–
–
–
–
–
20
20
–
–
3
3
23
23
302
302
–
–
–
–
–
–
–
–
7
7
7
7
309
309
(528)
(528)
(154)
(154)
–
–
(154)
(154)
–
–
–
–
–
–
–
–
(682)
(682)
(51)
(51)
–
–
(51)
(51)
–
–
–
–
–
–
(733)
(733)
1,017
1,017
(36)
(36)
(25)
(25)
(61)
(61)
330
330
–
–
–
–
–
–
(58)
(58)
272
272
1,228
1,228
(5)
(5)
9
9
4
4
–
–
–
–
–
–
(85)
(85)
(85)
(85)
1,147
1,147
Total
Total
equity
equity
$M
$M
(394)
(394)
(154)
(154)
(31)
(31)
(185)
(185)
20
20
–
–
3
3
23
23
(556)
(556)
(51)
(51)
36
36
(15)
(15)
–
–
7
7
7
7
(564)
(564)
The above consolidated statements of changes in equity should be read in conjunction with the accompanying
The above consolidated statements of changes in equity should be read in conjunction with the accompanying
notes.
notes.
99
99
99
TUIR026_Annual_Report_2017_inner_spreads_art02_sp.indd 99
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Transurban Holding Trust and Transurban International Limited
Consolidated statement of cash flows
Consolidated statement of cash flows
for the year ended 30 June 2017
for the year ended 30 June 2017
Transurban International
Limited
Transurban International
Limited
Transurban
Holding Trust
Transurban
Holding Trust
2017
$M
2017
$M
2016
$M
2016
$M
Note
Note
(a)
(a)
–
–
–
(81)
–
–
(81)
290
–
290
209
209
652
(5)
652
–
(5)
(95)
–
246
(95)
(599)
246
(599)
199
199
574
(2)
574
–
(2)
–
–
220
–
(495)
220
(495)
297
297
(1,710)
–
(1,710)
(23)
–
–
(23)
94
–
94
(1,639)
(1,639)
Cash flows from operating activities
Receipts from customers
Cash flows from operating activities
Payments to suppliers
Receipts from customers
Payments for maintenance of intangibles
Payments to suppliers
Transaction costs related to acquisitions
Payments for maintenance of intangibles
Interest received
Transaction costs related to acquisitions
Interest paid
Interest received
Interest paid
Net cash inflow from operating activities
Net cash inflow from operating activities
Cash flows from investing activities
Payments for acquisition of subsidiary
Cash flows from investing activities
Payments for property, plant and equipment
Payments for acquisition of subsidiary
Payments for intangible assets
Payments for property, plant and equipment
Payments for held-to-maturity investments, net of fees
Payments for intangible assets
Distributions received from equity accounted investments
Payments for held-to-maturity investments, net of fees
Distributions received from equity accounted investments
Net cash inflow from investing activities
Net cash inflow from investing activities
Cash flows from financing activities
Loans (to)/from related parties
Cash flows from financing activities
Repayment of loans from/(to) related parties
Loans (to)/from related parties
Proceeds from issue of securities
Repayment of loans from/(to) related parties
Proceeds from borrowings (net of costs)
Proceeds from issue of securities
Repayment of borrowings
Proceeds from borrowings (net of costs)
Distributions paid to Transurban Group's security
Repayment of borrowings
holders
Distributions paid to Transurban Group's security
Distributions paid to non-controlling interests in
holders
subsidiaries
Distributions paid to non-controlling interests in
Proceeds from equity issued to non-controlling interests
subsidiaries
Proceeds from equity issued to non-controlling interests
Net cash outflow from financing activities
Net cash outflow from financing activities
Net (decrease)/increase in cash and cash
equivalents
Net (decrease)/increase in cash and cash
Cash and cash equivalents at the beginning of the year
equivalents
Effects of exchange rate changes on cash and cash
Cash and cash equivalents at the beginning of the year
equivalents
Effects of exchange rate changes on cash and cash
equivalents
Cash and cash equivalents at end of year
Cash and cash equivalents at end of year
(a) Reconciliation of profit after income tax to net cash inflow from operating activities
(a) Reconciliation of profit after income tax to net cash inflow from operating activities
(278)
(160)
(278)
821
(160)
2,541
821
(1,205)
2,541
(1,205)
(579)
(579)
(55)
(55)
330
330
1,415
1,415
(1,858)
1,796
(1,858)
–
1,796
1,759
–
(1,454)
1,759
(1,454)
(694)
(694)
(84)
(84)
–
–
(535)
(535)
(127)
(127)
229
229
–
–
102
102
73
73
156
156
–
–
229
229
Profit/(loss) for the year
Depreciation and amortisation
Profit/(loss) for the year
Non-cash net finance costs
Depreciation and amortisation
Non-cash net finance costs
Change in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
Change in operating assets and liabilities:
(Increase)/decrease in concession notes
(Increase)/decrease in trade and other receivables
(Decrease)/increase in related party operating loans
(Increase)/decrease in concession notes
(Decrease)/Increase in trade creditors and accruals
(Decrease)/increase in related party operating loans
Increase/(decrease) in other operating provisions
(Decrease)/Increase in trade creditors and accruals
Increase/(decrease) in provision for income taxes
Increase/(decrease) in other operating provisions
payable
Increase/(decrease) in provision for income taxes
Increase/(decrease) in maintenance provision
payable
Increase/(decrease) in other liabilities
Increase/(decrease) in maintenance provision
Increase/(decrease) in other liabilities
Net cash outflow from operating activities
Net cash outflow from operating activities
202
310
202
23
310
23
–
15
–
(276)
15
(87)
(276)
–
(87)
–
–
–
–
12
–
12
199
199
THT
THT
2017
$M
2017
$M
2016
$M
2016
$M
173
276
173
36
276
36
(1)
(95)
(1)
(208)
(95)
112
(208)
–
112
–
1
1
–
3
–
3
297
297
2017
$M
2017
$M
2016
$M
2016
$M
207
(70)
207
(1)
(70)
–
(1)
1
–
(33)
1
(33)
104
104
–
(9)
–
(31)
(9)
(162)
(31)
–
(162)
–
(202)
(202)
38
(11)
38
–
(11)
–
–
(2)
–
(2)
–
–
–
–
–
–
25
25
(73)
(73)
245
245
(5)
(5)
167
167
TIL
TIL
2017
$M
2017
$M
(51)
40
(51)
63
40
63
–
–
–
67
–
2
67
2
2
2
(41)
(41)
22
–
22
–
104
104
167
(70)
167
(1)
(70)
–
(1)
–
–
(28)
–
(28)
68
68
–
(1)
–
(19)
(1)
–
(19)
–
–
–
(20)
(20)
18
(26)
18
20
(26)
–
20
–
–
–
–
–
–
–
–
–
12
12
60
60
179
179
6
6
245
245
2016
$M
2016
$M
(154)
37
(154)
82
37
82
(4)
–
(4)
115
–
2
115
–
2
–
(31)
(31)
21
–
21
–
68
68
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
100
100
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
Basis of preparation and significant changes
D1
Introduction
The Transurban Holding Trust Group consists of Transurban Holding Trust (‘THT’) and the entities it controls
(‘THT Group’) and the Transurban International Limited Group consists of Transurban International Limited (‘TIL’)
and the entities it controls (‘TIL Group’). THT and TIL form part of the stapled Transurban Group.
THT is registered as a managed investment scheme under Chapter 5C of the Corporations Act 2001, and as a
result requires a responsible entity. The responsible entity of the THT is Transurban Infrastructure Management
Limited (‘TIML’). TIML is the responsible entity of the Trust and is responsible for performing all functions that are
required under the Corporations Act 2001 of a responsible entity.
THT is a Trust registered and domiciled in Australia.
TIL is a public company limited by shares and incorporated in Australia.
Going concern
TIL’s current liabilities exceed its current assets by $1,314 million as at 30 June 2017. This is primarily attributable
to a $1,591 million loan payable to another entity within the Transurban Group. Excluding this loan, the TIL Group
has net current assets of $277 million.
Under the stapling arrangement, each entity is able to provide direct and/or indirect support to each other entity
and its controlled entities within the Transurban Group.
The financial reports have been prepared on a going concern basis, which assumes the continuity of normal
operations.
D2 Trust formation and termination
The Transurban Holding Trust was established on 15 November 2001 and has no termination date. The Trust
was registered as a managed investment scheme by the Australian Securities and Investments Commission on
28 November 2001.
101
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
Operating performance
D3 Segment information
Refer to note B4 for further information around the structure of the segments for the Transurban Group.
THT operating segments
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. All 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.
TIL operating segments
Management has determined that TIL has one operating segment.
TIL operations involve the development, operation and maintenance of toll roads in the Greater Washington Area.
All revenues and expenses are directly attributable to these activities. The management structure and internal
reporting of TIL are based on this one operating segment.
Reconciliation of segment information to statutory financial information
Segment information for TIL as disclosed in the Transurban Group segment note at B4 is reconciled to the TIL
statutory financial information below.
Segment revenue
Revenue from external customers is through toll and service and fee revenues earned on toll roads. There are no
inter-segment revenues. Segment revenue reconciles to total statutory revenue as follows:
TIL
2017
$M
209
24
233
TIL
2017
$M
116
(4)
112
(164)
(40)
(92)
2016
$M
174
–
174
2016
$M
86
–
86
(234)
(37)
(185)
Total segment revenue (proportional)
Add:
Construction revenue from road development activities
Total revenue
Reconciliation of proportional EBITDA to statutory profit for the year
Proportional EBITDA reconciles to statutory net profit as follows:
Proportional EBITDA
Add:
EBITDA attributable to TIL corporate activities (disclosed in corporate and other)
Statutory earnings before depreciation and amortisation, net finance costs,
equity accounted investments and tax
Statutory net finance costs
Statutory depreciation and amortisation
Loss before tax for the year from continuing operations
.
102
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2017 Transurban Annual Report
D4 Revenue
Toll revenue
Rental income
Construction revenue
Other revenue
Concession fees
Total revenue
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
THT
TIL
2017
$M
–
649
87
–
28
764
2016
$M
–
575
35
1
30
641
2017
$M
209
–
24
–
–
233
2016
$M
174
–
–
–
–
174
Revenue type
Recognition
Rental income
Rental income is derived from property held by THT and is recognised in profit and loss in
accordance with the lease contract.
Concession fees
Other income from concession fees relates to the CityLink concession notes. Pursuant to
the Agreement for the Melbourne CityLink Concession Deed (the Concession Deed),
CityLink Melbourne Limited (‘CityLink’) (a member of the Transurban Group), is required to
pay annual concession fees for the duration of CityLink's concession period. Until a certain
threshold rate of return on the project is achieved, the payment of concession fees due
under the Concession Deed can be satisfied by means of non-interest bearing concession
notes.
Following agreements reached with the State of Victoria (the State), the Group paid a total
of $765 million to the State to have all current concession notes issued by the State
assigned to Transurban Holding Trust, and the State directed CityLink to pay future
concession notes to Transurban Holding Trust. Accordingly, CityLink continues to issue
notes semi-annually to Transurban Holding Trust, and Transurban Holding Trust
recognises concession note income from the issue of these notes, at the present value of
expected future repayments.
D5
Income tax
TIL deferred tax assets and liabilities
The balance comprises temporary difference
attributable to:
Accrued expenses
Provisions
Current and prior year losses
Fixed assets/intangibles
Cash flow hedges
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
Movements:
Opening balance at 1 July
Credited/(charged) to the statement of comprehensive
income
Credited /(charged) to equity
Foreign exchange movements
Transfer from deferred tax assets/liabilities
Other
Closing balance 30 June
Deferred tax assets/(liabilities) to be recovered after more
than 12 months
Asset
Liability
2017
$M
2016
$M
7
31
301
38
41
418
(55)
363
364
23
(10)
(21)
6
56
418
418
7
21
260
42
34
364
(12)
352
239
78
13
8
(44)
70
364
364
2017
$M
–
–
–
(321)
–
(321)
55
(266)
(294)
(32)
–
11
(6)
–
(321)
(321)
2016
$M
–
–
–
(294)
–
(294)
12
(282)
(210)
(117)
–
(6)
44
(5)
(294)
(294)
103
103
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
Security holder outcomes
D6 Distributions
Refer to note B10 of the THL financial statements for the dividends/distributions paid and payable by the Group.
Movements in distribution provision – THT
Balance at 1 July 2015
Additional provision recognised
Amounts paid
Amounts reinvested
Balance at 30 June 2016
Additional provision recognised
Amounts paid
Amounts reinvested
Balance at 30 June 2017
D7 Earnings per stapled security
Distribution to
security
holders
$M
Distributions to
non-controlling
interest
in subsidiaries
$M
326
762
(579)
(112)
397
911
(694)
(142)
472
46
58
(55)
–
49
85
(84)
–
50
THT
TIL
2017
2016
2017
Profit/(loss) attributable to ordinary security holders ($M)
207
209
(51)
Total
$M
372
820
(634)
(112)
446
996
(778)
(142)
522
2016
(154)
Weighted average number of securities (M)
2,046
1,982
2,046
1,982
Basic and diluted earnings per security attributable to the
ordinary security holders (Cents)
10.1
10.5
(2.5)
(7.8)
104
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
Capital and borrowings
D8 Reserves
Refer to note B12 for a description of the nature and purpose of each reserve.
THT
Balance 1 July 2015
Revaluation, net of tax
Balance 30 June 2016
Revaluation, net of tax
Balance 30 June 2017
TIL
Balance 1 July 2015
Revaluation, net of tax
Currency translation differences
Balance 30 June 2016
Revaluation, net of tax
Currency translation differences
Balance 30 June 2017
D9 Net finance costs
Finance income
Interest income from related parties
Other interest income
Net foreign exchange gains
Re-measurement of concession notes receivable
Total finance income
Finance costs
Interest and finance charges paid/payable
Unwind of discount on liabilities – other liabilities
Unwind of discount on liabilities – promissory note
Net foreign exchange losses
Re-measurement of concession notes receivable
Total finance costs
Net finance costs
Re-measurement of concession notes
Cash flow
hedges
$M
4
(20)
–
(16)
16
–
–
Cash flow
hedges
$M
Share-based
payments
$M
Total
$M
(48)
(50)
(98)
47
(51)
5
1
6
1
7
(43)
(49)
(92)
48
(44)
Foreign
currency
translation
Transactions
with non-
controlling
interests
$M
(91)
–
(11)
(102)
–
20
(82)
2016
$M
477
8
2
63
550
(587)
(3)
(13)
–
–
(603)
(53)
$M
(58)
–
–
(58)
–
–
(58)
TIL
2017
$M
–
–
3
–
3
(167)
–
–
–
–
(167)
(164)
Total
$M
(145)
(20)
(11)
(176)
16
20
(140)
2016
$M
–
–
–
–
–
(230)
–
–
(4)
–
(234)
(234)
THT
2017
$M
520
2
–
–
522
(635)
(3)
(2)
(2)
(41)
(683)
(161)
Re-measurement of concession notes represents the discount unwinding over the passage of time on these notes
and the change in the payment profile of the concession notes.
105
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
D10 Borrowings
Refer to note B14 for a description of each facility type.
Current
TIFIA
Term debt
Non-current
Capital markets debt
U.S. private placement
Term debt
TIFIA
Total borrowings
D11 Derivative and financial risk management
The instruments used by the Group are described in note B15.
2017
$M
THT
2017
$M
–
405
405
1,452
1,669
2,527
–
5,648
6,053
2016
$M
–
276
276
1,018
929
3,536
–
5,483
5,759
2016
$M
–
–
–
626
–
–
1,167
1,793
1,793
TIL
2017
$M
12
–
12
604
–
–
1,176
1,780
1,792
2016
$M
Assets
Interest rate swap contracts –
cash flow hedges
Liabilities
Interest rate swap contracts –
cash flow hedges
Cross currency interest rate swap contracts –
cash flow hedges
Market risk
Foreign exchange risk
Current
THT
TIL
Non-current
THT
TIL
Current
THT
TIL
Non-current
THT
TIL
–
1
–
1
–
–
–
–
8
–
–
25
107
132
59
–
59
11
–
11
–
–
–
–
–
–
118
30
148
87
–
87
Exposure to foreign currency risk at the reporting date, denominated in the currency in which the risk arises, was
as follows:
Receivables
Payables
Borrowings
Cross-currency interest rate swaps
Net exposure
Sensitivity
THT
AUD/USD
+ 10 cents
- 10 cents
AUD/CHF
+ 10 cents
- 10 cents
THT
2016
USD
$M
1,121
(1,084)
(641)
641
37
2017
USD
$M
1,216
(1,165)
(1,074)
1,074
51
2017
CHF
$M
–
–
(375)
375
–
2016
CHF
$M
–
–
(200)
200
–
TIL
2017
AUD
$M
2016
AUD
$M
1
(6)
–
–
(5)
1
(9)
–
–
(8)
Movement in
post-tax profit
Increase / (decrease) in
equity
2017
$M
2016
$M
(8)
10
–
–
(6)
8
–
–
2017
$M
(28)
40
(15)
27
2016
$M
(30)
42
(10)
17
TIL’s profit and equity are not materially impacted by movements in foreign exchange.
106
106
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
D11 Derivative and financial risk management (continued)
Interest rate risk
THT and TIL are not materially impacted by movements in interest rates. As at the reporting date, the Group had
the following variable rate borrowings and interest rate swap contracts outstanding:
2017
$M
2016
$M
THT
TIL
THT
102
(3,065)
2,988
25
167
(292)
292
167
229
(3,957)
3,957
229
TIL
245
(303)
303
245
Cash and cash equivalents
Floating rate borrowings
Interest rate swaps (notional principal amount)
Net exposure to interest rate risk
Liquidity risk
Contractual maturities of financial liabilities
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. For further information refer to note B15.
THT
2017
$M
1 year
or less
Over
1 to 2
years
Over
2 to 3
years
Over
3 to 4
years
Over
4 to 5
years
Over 5
years
Total
contractual
cash flows
Carrying
amount
Trade payables
Borrowings
Related party loans
Interest rate swaps
Cross-currency swaps
Concession and
promissory notes
Other liabilities
Total
55
581
912
22
40
–
–
893
733
8
39
–
–
879
454
2
39
–
14
1,624
47
1,720
–
1,374
–
1,085
1,202
–
38
–
–
2,325
–
368
412
–
38
–
–
818
–
4,056
3,916
(15)
(118)
193
–
8,032
55
7,862
7,629
17
76
193
55
6,056
5,802
18
107
38
61
15,893
56
12,132
2016
$M
Trade payables
Borrowings
Related party loans
Interest rate swaps
Cross-currency swaps
Concession and
promissory notes
Other liabilities
Total
1 year
or less
Over
1 to 2
years
Over
2 to 3
years
Over
3 to 4
years
Over
4 to 5
years
Over 5
years
Total
contractual
cash flows
Carrying
amount
142
443
634
44
22
–
–
1,285
–
1,003
763
37
21
–
14
1,838
–
858
655
26
21
–
46
1,606
–
1,222
409
10
21
–
–
1,662
–
996
1,172
7
20
–
–
2,195
–
2,615
3,123
18
(106)
181
–
5,831
142
7,137
6,756
142
(1)
181
142
5,759
5,101
129
30
34
60
14,417
53
11,248
107
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
D11 Derivative and financial risk management (continued)
TIL
2017
$M
1 year
or less
Over
1 to 2
years
Over
2 to 3
years
Over
3 to 4
years
Over
4 to 5
years
Over 5
years
Total
contractual
cash flows
Carrying
amount
Trade payables
Borrowings
Related party loans
Interest rate swaps
Total
48
43
1,657
9
1,757
–
69
–
8
77
–
89
–
8
97
–
94
–
7
101
–
95
–
7
102
–
3,333
–
39
3,372
48
3,723
1,657
78
5,506
48
1,792
1,591
59
3,490
2016
$M
Trade payables
Borrowings
Related party loans
Interest rate swaps
Total
1 year
or less
Over
1 to 2
years
Over
2 to 3
years
Over
3 to 4
years
Over
4 to 5
years
Over 5
years
Total
contractual
cash flows
Carrying
amount
29
10
1,651
11
1,701
–
19
–
11
30
–
69
–
10
79
–
83
–
10
93
–
83
–
9
92
–
4,274
–
60
4,334
29
4,538
1,651
111
6,329
29
1,793
1,559
87
3,468
108
108
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
Network summary
Refer to the Network summary section of the Group financial statements for the intangible assets, concession
note and promissory note accounting policies.
D12 Intangible assets
2017
$M
Cost
Accumulated amortisation
Net book amount
Concession assets
Assets under construction
Total
THT
TIL
11,505
(1,926)
9,579
2,590
(101)
2,489
THT
121
–
121
TIL
58
–
58
THT
TIL
11,626
(1,926)
9,700
2,648
(101)
2,547
2016
$M
Concession assets
Assets under construction
Total
THT
TIL
THT
TIL
THT
Cost
Accumulated amortisation
Net book amount
11,505
(1,616)
9,889
2,681
(68)
2,613
31
–
31
7
–
7
11,536
(1,616)
9,920
Movement in intangible assets
Opening balance 1 July 2015
Additions
Acquisition of subsidiary
Currency and other adjustments
Transfer
Amortisation charge
Net book amount 30 June 2016
Additions
Currency and other adjustments
Transfer
Amortisation charge
Net book amount 30 June 2017
Concession assets
$M
Assets under construction
$M
Total
$M
THT
8,331
50
1,710
–
74
(276)
9,889
–
–
–
(310)
9,579
TIL
2,562
–
–
88
–
(37)
2,613
–
(90)
–
(34)
2,489
THT
83
22
–
–
(74)
–
31
90
–
–
–
121
TIL
–
7
–
–
–
–
7
53
(2)
–
–
58
THT
8,414
72
1,710
–
–
(276)
9,920
90
–
–
(310)
9,700
TIL
2,688
(68)
2,620
TIL
2,562
7
–
88
–
(37)
2,620
53
(92)
–
(34)
2,547
D13 Other liabilities – concession and promissory notes
M2 Motorway
The face value of promissory notes on issue at 30 June 2017 is $193 million (2016: $181 million). The net present
value at 30 June 2017 of the redemption payments relating to these promissory notes is $38 million (2016: $34
million).
109
109
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
Group structure
D14 Equity accounted investments
Set out below is the summarised financial information for the THT Group’s investments accounted for using the
equity method. The summarised financial information presented below is on a 100 per cent basis. Refer to note
B22 for the details of the NorthWestern Roads Group.
THT
Summarised balance sheet – 100%
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Summarised statement of comprehensive income – 100%
Revenue
Depreciation and amortisation
Other expenses
Interest income
Income tax expense
Profit for the year
Other comprehensive income
Total comprehensive income
NorthWestern
Roads Group
2017
$M
2016
$M
47
2,436
(37)
(1,639)
807
4
2,498
(11)
(1,341)
1,150
131
(34)
(4)
37
(5)
125
58
183
130
(34)
(2)
50
(3)
141
–
141
50%
70
70
–
The following table reconciles the above summarised financial information presented on a 100 per cent basis to the
proportional amounts recognised by the Group
Ownership interest
Proportional total comprehensive income
Profits not recognised
Group's share of comprehensive income
50%
91
91
–
Reconciliation of summarised financial information
Reconciliation of the summarised financial information presented to the carrying amount of the Group’s interest in
associates
THT
Opening carrying value 1 July
Group’s recognised share of total comprehensive income
Distributions received
Closing carrying value
Cumulative losses not recognised
NorthWestern
Roads Group
50%
2017
$M
768
–
(290)
478
53
2016
$M
862
–
(94)
768
178
110
110
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
D15 Non-controlling interests
Set out below is summarised financial information for each material subsidiary that has non-controlling interests
that are material to THT. The amounts disclosed for each subsidiary are before inter-company eliminations.
THT
Summarised balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Carrying amount of NCI
Summarised statement of comprehensive income
Revenue
(Loss)/profit for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
(Loss)/profit allocated to NCI
OCI allocated to NCI
Summarised cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net (decreases)/increases in cash and cash equivalents
Transurban
Queensland
37.5%
Airport Motorway
Trust
24.9%
Total
2017
$M
2016
$M
2017
$M
2016
$M
2017
$M
2016
$M
196
6,967
(60)
(4,163)
2,940
1,103
265
7,106
(145)
(4,064)
3,162
1,186
21
885
(201)
(530)
175
44
21
881
(198)
(536)
168
42
217
7,852
(261)
(4,693)
3,115
1,147
286
7,987
(343)
(4,600)
3,330
1,228
326
(63)
20
(43)
(24)
7
259
(144)
(70)
(214)
(54)
(26)
(13)
(50)
(65)
(128)
104
(1,710)
1,630
24
109
76
7
83
19
2
73
–
(73)
–
106
72
4
76
18
1
59
–
(59)
–
435
13
27
40
(5)
9
365
(72)
(66)
(138)
(36)
(25)
60
(50)
(138)
(128)
163
(1,710)
1,571
24
111
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2017 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
for the year ended 30 June 2017
Other
D16 Related party transactions
THT
Transactions with related parties
Rental income
Interest income
Interest expense
Other expenses
Outstanding balances with related parties
Current receivables
Non-current receivables
Concession notes
Current liabilities
Non-current liabilities
TIL
Transactions with related parties
Interest expense
Other expenses
Outstanding balances with related parties
Loan to related parties
Loan from related parties
1. Transactions and outstanding balances between THT/TIL and THL.
D17 Parent entity financial information
Summary financial information
THL1
2017
$’000
648,915
519,605
304,823
4,353
2016
$’000
574,993
477,387
311,519
4,263
1,922,516
7,452,217
946,490
639,861
5,162,354
2,376,501
5,966,590
959,850
266,201
4,835,193
THL1
2017
$’000
65,871
9,167
2016
$’000
127,373
7,470
–
1,590,698
7,786
1,559,664
The individual financial statements for the parent entities (THT and TIL) show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued units/contributed equity
Reserves
(Accumulated losses)/Retained earnings
Shareholders’ equity
Profit for the year
Exchange differences on translation of USD balances,
net of tax
Total comprehensive income/(loss)
THT
2017
$M
2,132
14,836
717
5,517
9,319
10,665
7
(1,353)
9,319
743
–
743
2016
$M
2,828
14,238
687
4,897
9,341
10,520
6
(1,185)
9,341
393
–
393
TIL
2017
$M
342
365
–
–
365
309
55
1
365
–
(13)
(13)
2016
$M
351
372
–
–
372
302
69
1
372
3
11
14
112
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2017 Transurban Annual Report
Transurban Holdings Limited, Transurban Holding Trust and Transurban International Limited
Directors’ declaration
for the year ended 30 June 2017
Section E: Signed reports
In the opinion of 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’):
(a)
the financial statements and notes of Transurban Holdings Limited and its controlled entities, including
Transurban Holding Trust and its controlled entities and Transurban International Limited and its controlled
entities set out on pages 45 to 112 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, 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 2017 and of its
performance for the year ended on that date, and
(b)
there are reasonable grounds to believe that the Transurban Holdings Limited Group, Transurban Holding
Trust Group and Transurban International Limited Group will be able to pay their debts as and when they
become due and payable, and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended
Closed Group identified in note B24 will be able to meet any obligations or liabilities to which they are, or
may become liable, subject by virtue of the deed of cross guarantee described in note B24.
Note B3 confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
Lindsay Maxsted
Director
Scott Charlton
Director
Melbourne
8 August 2017
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2017 Transurban Annual Report
Independent auditor’s report
Independent auditor’s report
Independent auditor’s report
To the stapled security holders of Transurban Holdings Limited, Transurban Holding Trust and
To the stapled security holders of Transurban Holdings Limited, Transurban Holding Trust and
To the stapled security holders of Transurban Holdings Limited, Transurban Holding Trust and
Transurban International Limited
Transurban International Limited
Transurban International Limited
Report on the audit of the financial report
Report on the audit of the financial report
Report on the audit of the financial report
Our opinion
Our opinion
Our opinion
In our opinion:
In our opinion:
In our opinion:
The accompanying financial reports of Transurban Holdings Limited (THL or the Company) and its
The accompanying financial reports of Transurban Holdings Limited (THL or the Company) and its
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
controlled entities (together the Transurban Group or the Group), Transurban Holding Trust (the
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
Trust) and its controlled entities (together THT) and Transurban International Limited (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
International Company) and its controlled entities (together TIL) are in accordance with the
International Company) and its controlled entities (together TIL) are in accordance with the
Corporations Act 2001, including:
Corporations Act 2001, including:
Corporations Act 2001, including:
a) giving a true and fair view of the financial positions of the Transurban Group, THT and TIL as at
a) giving a true and fair view of the financial positions of the Transurban Group, THT and TIL as at
a) giving a true and fair view of the financial positions of the Transurban Group, THT and TIL as at
30 June 2017 and of their financial performance for the year then ended
30 June 2017 and of their financial performance for the year then ended
30 June 2017 and of their financial performance for the year then ended
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
What we have audited
What we have audited
The financial reports of the Transurban Group, THT and TIL (the financial report) comprise:
The financial reports of the Transurban Group, THT and TIL (the financial report) comprise:
The financial reports of the Transurban Group, THT and TIL (the financial report) comprise:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the consolidated balance sheets as at 30 June 2017
the consolidated balance sheets as at 30 June 2017
the consolidated balance sheets as at 30 June 2017
the consolidated statements of comprehensive income for the year then ended
the consolidated statements of comprehensive income for the year then ended
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 changes in equity 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 consolidated statements of cash flows 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
the notes to the consolidated financial statements, which include a summary of significant
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
accounting policies
accounting policies
the directors’ declaration
the directors’ declaration
the directors’ declaration
Basis for opinion
Basis for opinion
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the later sections of our report.
those standards are further described in the later sections of our report.
those standards are further described in the later sections of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
our opinion.
our opinion.
Independence
Independence
Independence
We are independent of the Transurban Group, THT and TIL in accordance with the auditor
We are independent of the Transurban Group, THT and TIL in accordance with the auditor
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
independence requirements of the Corporations Act 2001 and the ethical requirements of the
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
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
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. We have also fulfilled our
Accountants (the Code) that are relevant to our audit of the financial report. We have also fulfilled our
Accountants (the Code) that are relevant to our audit of the financial report. We have also fulfilled our
other ethical responsibilities in accordance with the Code.
other ethical responsibilities in accordance with the Code.
other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
PricewaterhouseCoopers, ABN 52 780 433 757
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331 MELBOURNE VIC 3001
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331 MELBOURNE VIC 3001
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
T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au
T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
114
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114
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2017 Transurban Annual 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 give an opinion on the
financial report as a whole, taking into account the geographic and management structure of the
Transurban Group, THT and TIL, their accounting processes and controls and the industry in which
they operate.
Materiality
• For the purpose of our audit of the Group we used overall group materiality of $38 million, which represents
approximately 2.5% of the earnings before interest, tax, depreciation and amortisation expenses (EBITDA) of
the Group.
• 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 and were determined separately for the Group,
THT and TIL. Relevant amounts listed for each part of the stapled group represent balances as they are
presented in the financial report and should not be aggregated. 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. We communicated the key audit matters to the
Audit and Risk Committee.
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2017 Transurban Annual Report
Group - Note B5
Recording of toll revenue
THT
TIL – Note D4
Toll revenue: $2,083m
KAM not applicable – no toll revenue
Toll Revenue: $209m
Key audit matter
The Transurban Group operates toll roads in 4 geographic
segments: Melbourne, Sydney and Brisbane in Australia and the
Greater Washington Area in the United States. Each toll road
records and recognises revenue through the use of technology,
specifically, road side equipment supported by tolling and billing
systems.
Tolling equipment and systems are highly customised complex
systems that are built with the purpose of correctly identifying
vehicle type, calculating correct fare and linking the vehicle to the
customer’s account for billing purposes or obtaining information
from local transport authorities for vehicles that have not made a
valid billing arrangement.
Every toll road operates under a different concession deed which
governs the means by which customers are charged.
This was a key audit matter for the Group and TIL due to the large
volume of transactions that were processed in the year, the unique
nature of each toll road and the reliance on bespoke information
technology systems and controls.
This is the first financial year in which Airportlink M7 revenue is
included for the full 12 month period.
How our audit addressed the key audit
matter
Our procedures included, amongst others:
•
•
•
•
Testing a selection of Information
Technology General Controls (ITGCs)
supporting the integrity of the tolling
systems’ operation, including access,
operations and change management
controls.
Performing tests of the design and
operation of relevant controls over
revenue adjustments, write offs, image
processing and exception reporting.
Performing testing of the review and
approval of a selection of toll price
increases for each toll road during the
year.
Performing data analysis of manual
journals and adjustments to revenue
to test a sample of material postings to
revenue and checking that they were
generated by the tolling systems.
• Comparing the revenue profile for
each toll road to the prior year, taking
into account observed increases in
traffic and approved toll price
increases to the prior year and budget.
•
Testing a selection of cash collected by
the US toll roads.
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2017 Transurban Annual Report
Group - Note B14
THT - Note D10
TIL – Note D10
Current Borrowings: $880m
Current Borrowings: $405m
Current Borrowings: $12m
Non-Current Borrowings: $12,868m
Non-Current Borrowings: $5,648m
Non-Current Borrowings: $1,780m
Borrowings
Key audit matter
Borrowings are an integral part of the Transurban Group’s
business model as it is the key source of funds used by the
business to fund new projects and upgrades to existing concession
assets. Borrowings represent the largest liability on the balance
sheets.
During the year the Transurban Group refinanced over $2 billion
of borrowings through bonds issuances and new bank facilities.
Each of the borrowing agreements has its own set of terms and
conditions and therefore audit work was required to assess the
treatment of the agreements and their impact on the financial
statements.
Given the size of the borrowings balance, the number of
borrowing agreements in place and the importance of the funding
structure for continued growth, the accounting for borrowings was
considered a key audit matter for the Group, THT and TIL.
How our audit addressed the key audit
matter
Our procedures included, amongst others:
• Obtaining confirmations from banks
to confirm a selection of borrowings,
including amounts, tenure and
conditions.
• Reading the most up-to-date
borrowing agreements with the
financiers to develop an
understanding of the terms associated
with the facilities and the amount of
facility available for drawdown.
• Where debt is regarded as non-
current, considering whether there is
an unconditional right to defer
payment such that there were no
repayments required within 12 months
from the 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.
117
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2017 Transurban Annual Report
Service concession arrangements
Group - Notes B16 - B18, B25
THT – Notes D12, D13
TIL – Note D12
Concession assets: $17,793m
Concession assets: $9,579m
Concession assets: $2,489m
Maintenance provision: $994m
Concession notes receivable: $946m
Maintenance provision: $67m
How our audit addressed the key audit
matter
We evaluated the concession agreements for
each toll road to develop an understanding of
the nature of the agreements with the
concession grantors and assess the
accounting implications of the contractual
arrangements.
Our other procedures included, amongst
others:
•
Performing tests of the design and
operation of controls over a selection
of the forecast and modelling
processes impacting the models.
• Considering the relevant obligations in
the concession agreements having
regard to the calculations in the
models and corresponding balance
sheet line items.
•
Involving valuation specialists to
assess the calculation methodology
and reasonableness of the
assumptions used within the models.
• Evaluating the impairment indicator
assessment.
• Assessing the mathematical accuracy
of the models and agreeing key data to
the latest approved budgets and
forecasts.
• Assessing the adequacy of the
disclosures in the financial report in
respect of contractual arrangements
having regard to the requirements of
Australian Accounting Standards.
Other liabilities: $78m
Other provisions: $90m
Key audit matter
Other liabilities: $38m
Each of the concession assets in the Transurban Group’s portfolio
represents a contractual right under a concessional agreement to
toll a road in return for the capital and expertise needed to build,
maintain and operate the road.
Every concession asset is governed by its own concession
agreement between the Group and the concession grantor
(typically government or a local transport authority of the region
in which concession is granted). As a result, the Transurban
Group is subject to a number of contractual obligations, some of
which have a direct impact on financial statements. Whenever the
Group undertakes a new project to construct, acquire or upgrade
the asset, its contractual arrangements with concession grantors
are altered either through a new concession agreement or an
amendment of the existing concessional agreement.
The right to receive future economic benefits is recognised on the
balance sheet as a concession asset. The asset is recognised at cost
of construction or price paid at acquisition. The Group monitors
performance of the assets for indicators of impairment at the end
of each reporting period. Where indicators are identified during
the period, the Group compares the carrying amount to its
estimate of the recoverable amount of the asset.
The concession agreements also contain clauses that require the
Transurban Group to make cash outflows in the future, resulting
in the recognition of concession liabilities such as maintenance
liabilities, concession note liabilities and contingent consideration
liabilities.
The concession asset recoverable amount and concession
liabilities recognised are calculated by estimating the net present
value of future cash flows of the concession agreements using
discounted cash flow models (the models). This area requires
significant judgement by the Group due to a number of uncertain
assumptions that impact the timing and quantum of future cash
flows generated by the toll road, specifically assumptions such as
future traffic expectations, operating costs, maintenance cash
outflows and finance cost forecasts.
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 impact on the financial statements.
During the year and up to the date of this report the Group
reached financial close on the Inner City Bypass upgrade project,
Logan Enhancement Project and 395 Express Lanes Project. Each
of these projects resulted in changes to the contractual obligations
of the Group. In addition to that, as projects such as the CityLink
Tulla Widening progress further and conditions of the agreements
are satisfied, audit work was required to assess the impact on
financial statements.
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2017 Transurban Annual Report
Group - Note B7
THT
TIL – Note D5
Income taxes
Income tax benefit: $35m
Deferred tax assets: $1,061m
Deferred tax liabilities: $931m
Key audit matter
KAM not applicable – trust structure is
not subject to income tax
Income tax benefit: $41m
Deferred tax assets: $363m
Deferred tax liabilities: $266m
Taxation was a key audit matter for the Group and TIL due to the
accounting complexity of the calculations, judgemental nature and
expertise required to estimate the tax position recorded.
The Transurban Group is subject to income taxes in Australia and
the United States. Judgement is required in determining the
provision for income taxes.
The Group is also subject to a number of industry specific tax
rules and provisions which require significant judgement and
detailed understanding of the legislation and relevant case law.
Some of the tax provisions are subject to interpretation and
therefore for some transactions the ultimate tax determination is
uncertain.
Deferred tax assets relating to carried forward tax losses are
recognised to the extent there are sufficient taxable temporary
differences relating to the same taxation authority against which
the unused tax losses can be utilised. The assumptions supporting
this position are dependent on future cash flows generated from
the toll roads operating in each tax group. Future taxable profits
will need to be generated in order to support the recognition of the
deferred tax assets. In the United States tax losses expire after a
20 year period.
Due to the stapled structure of the Group, tax calculations are
complex and require the Group to make judgments and
assumptions. Furthermore, as described in note B7 the
Transurban Group contains 4 different tax consolidated groups
with their own Tax Sharing and Tax Funding agreements, each of
which creates additional complexities in the calculations.
Other information
How our audit addressed the key audit
matter
Our procedures included, amongst others:
• Assessing the processes for identifying
uncertain tax positions and the related
accounting policy of provisioning for
tax exposures.
• Using PwC tax specialists to gain an
understanding of the current status of
tax assessments and investigations
and assessing the impact of new tax
laws and guidance on the tax balances
recognised.
• Reading recent rulings and
correspondence with local tax
authorities, as well as independent
external advice provided to the Group
and TIL where relevant, to assess the
associated tax provisions.
•
Testing a sample of deferred and
income tax calculations for each tax
group.
• Assessing the key assumptions used to
support the recognition of tax losses
and their future utilisation. The key
assumptions included judgements
over future traffic growth and pricing
assumptions.
The directors of Transurban Holdings Limited, Transurban International Limited and Transurban
Infrastructure Management Limited (as the responsible entity of Transurban Holding Trust),
(collectively referred to as “the directors”) are responsible for the other information. The other
information included in the Company’s annual report for the year ended 30 June 2017 comprises the
Director’s report (but does not include the financial report and our auditor’s report thereon), which we
obtained prior to the date of this auditor’s report. The other information also includes the Corporate
Governance Statement and Security holder information, which are expected to be made available to us
after that date.
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
identified 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.
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2017 Transurban Annual Report
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 as identified above, 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
decisions of users taken on the basis of the financial report.
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.
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Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 23 to 41 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the remuneration report of Transurban Holdings Limited for the year ended 30 June
2017 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
Chris Dodd
Partner
Melbourne
8 August 2017
121
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2017 Transurban Annual Report
Security holder information
The security holder information set out below was applicable as at 14 August 2017.
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 104,588.
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 77.76 per
cent.
The distribution of holders was as follows:
Security grouping
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 999,999,999
Total
Total holders
Stapled securities
% of issued stapled
securities
38,006
48,360
11,125
6,810
287
104,588
17,533,057
118,780,638
78,627,399
145,839,220
1,693,315,598
2,054,095,912
0.85
5.78
3.83
7.10
82.44
100.00
There were 2,989 holders of less than a marketable parcel of stapled securities.
There were 2,054,095,912 stapled securities on issue.
20 largest holders of stapled securities
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ARGO INVESTMENTS LIMITED
AMP LIFE LIMITED
AUSTRALIAN UNITED INVESTMENT COMPANY LIMITED
CUSTODIAL SERVICES LIMITED
MILTON CORPORATION LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BOND STREET CUSTODIANS LIMITED
DIVERSIFIED UNITED INVESTMENT LTD
NATIONAL NOMINEES LIMITED
BKI INVESTMENT COMPANY LIMITED
NAVIGATOR AUSTRALIA LTD
Total
Substantial holders
Number of stapled
securities held
703,693,138
% of issued
stapled securities
34.26
307,406,422
257,680,211
122,256,767
83,156,339
31,333,557
25,430,054
18,335,264
8,245,807
5,802,689
5,390,572
4,000,000
3,721,004
3,512,975
3,190,711
3,097,984
3,000,000
2,879,678
2,593,205
2,587,379
14.97
12.54
5.95
4.05
1.53
1.24
0.89
0.40
0.28
0.26
0.19
0.18
0.17
0.16
0.15
0.15
0.14
0.13
0.13
1,597,313,756
77.76
Substantial security holders as at 14 August 2017 were as follows:
Name
UNISUPER
COMMONWEALTH BANK OF AUSTRALIA
BLACKROCK GROUP
Number of stapled
securities held
278,743,444
110,939,481
102,336,832
% of issued stapled
securities
13.65
5.41
5.01
122
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2017 Transurban Annual Report Contents
E(cid:81)(cid:84)(cid:88)(cid:76)(cid:85)(cid:76)(cid:72)(cid:86)
(cid:55)(cid:85)(cid:68)(cid:81)(cid:86)(cid:88)(cid:85)(cid:69)(cid:68)(cid:81)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
1
122
(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)
Transurban’s 2017 Corporate Governance Statement is located at
www.transurban.com/corporate-governance-statement
E(cid:81)(cid:84)(cid:88)(cid:76)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:92)(cid:82)(cid:88)(cid:85)(cid:3)(cid:55)(cid:85)(cid:68)(cid:81)(cid:86)(cid:88)(cid:85)(cid:69)(cid:68)(cid:81)(cid:3)(cid:86)(cid:87)(cid:68)(cid:83)(cid:79)(cid:72)(cid:71)(cid:3)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
The stapled securities register is maintained by Computershare
Investor Services Pty Ltd.
If you have a question about your Transurban securities
or distributions please contact:
C(cid:82)(cid:80)(cid:83)(cid:88)(cid:87)(cid:72)(cid:85)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)
Yarra Falls
452 Johnston Street
Abbotsford, Victoria 3067
Australia
(cid:48)(cid:68)(cid:76)(cid:79)
The Registrar
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne, Victoria 3001
Australia
(cid:51)(cid:75)(cid:82)(cid:81)(cid:72)
(Australia ) 1300 555 159
(Overseas) +61 3 9415 4062
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2017
Transurban
Annual Report
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Australia
Melbourne (cid:11)(cid:75)(cid:72)(cid:68)(cid:71)(cid:3)(cid:82)(cid:605)(cid:70)(cid:72)(cid:12)
Level 23
Tower One, Collins Square
727 Collins Street
Docklands
Victoria 3008
Sydney
Level 9
(cid:20)(cid:3)(cid:38)(cid:75)(cid:76)(cid:565)(cid:72)(cid:92)(cid:3)(cid:54)(cid:84)(cid:88)(cid:68)(cid:85)(cid:72)
(cid:54)(cid:92)(cid:71)(cid:81)(cid:72)(cid:92)
New South Wales 2000
Brisbane
7 Brandl Street
Eight Mile Plains
Queensland 4113
Mailing Address
Locked Bag 28
South Melbourne Victoria 3205
Phone +61 3 8656 8900
Fax +61 3 8656 8585
United States
Washington DC Area
(cid:25)(cid:23)(cid:23)(cid:19)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:42)(cid:85)(cid:72)(cid:72)(cid:81)(cid:3)(cid:58)(cid:68)(cid:92)
Alexandria VA 22312
United States
Phone 571 419 6100
Email corporate@transurban.com
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transurban.com