Transurban Group (TCL) Earnings Call Transcript

Hello. My name is Angela Walker, and I'm the Commercial Director at WestConnex. It was an incredible privilege to be here recently with Aunty Marilyn Russell when she saw for the first time this beautiful artwork that she created with her mother Aunty Esme Timbery.

I did dream that it would be something so big and beautiful.

Called Movement of Shells, Movement of Time, the artwork sits above the WestConnex tunnels at St Peters Interchange and features traditional shell imagery that the Bidjigal people have handed down from mother to daughter for generations.

The shells and the waves, the movement of the waves.

Helping to share Aunty Marilyn's story gave me a much greater appreciation and understanding of that continuing connection. Transurban's roads and offices sit on the land of many First Nations peoples in Australia. I would like to acknowledge them and all traditional owners of country wherever you may be joining us from today and pay our respects to their elders, past, present and emerging. Thank you.

Well, good morning, ladies and gentlemen. My name is Lindsay Maxsted, and I'm the Chairman of Transurban Group. Welcome to the 2022 Annual General Meetings. This morning, we are holding 3 meetings concurrently. These are the Annual General Meeting for Transurban Holdings Limited, Transurban International Limited and Transurban Holding Trust. And we have a quorum, so I declare the meeting is open. As I am chairing today's meetings in Melbourne, on behalf of Transurban, I would like to acknowledge the traditional owners, the Wurundjeri people of the Kulin Nation. And we pay our respects to Aboriginal and Torres Strait Islander cultures and to elders past, present and emerging. Our assets are located on many different traditional lands and the impressive artwork that you've just seen in that video is one of the ways in which we demonstrate respect to the traditional owners and their connection to land in our local communities. The Board and I are pleased to be meeting with security holders in person today. The first time, of course, this has been possible since 2019. We're delighted to have the opportunity to meet in this forum once again. However, we also recognize that not everyone is able to attend in person, and for this reason, the meetings are being run in a hybrid format. For those who have joined online, we're pleased that you've joined us also today. As well as providing our security holders with an update on our operations, this AGM also provides an opportunity for Board members to hear directly from you, security holders, whether here in the room today or whether attending virtually. For those joining us virtually, we've worked very diligently to ensure the broadcast runs smoothly. But should you experience any technical difficulties, a recording of the meetings will be available on our website later today. As outlined in our Notice of Meeting, security holders attending in person and virtually will have the opportunity to vote and ask questions of the Board in real time. For those attending virtually, I encourage you to submit your written questions as early as possible. Also, to provide everyone with an opportunity to vote and in case anyone cannot stay for the duration of the meetings, I will now formally open the poll on all resolutions. The Notice of Meetings was made available to all of you. And with your consent, I shall take that document as read. I'd now like to introduce the Directors and our Company Secretary. On my immediate right is Chief Executive Officer, Scott Charlton; and our Independent Non-Executive Directors, Marina Go, Terry Bowen, Craig Drummond, Patricia Cross and Mark Birrell. And on my left, Company Secretary, Fiona Last; Peter Scott, Robert Field (sic) [ Whitfield ], Jane Wilson and Tim Reed. Since our last AGM, the Board has continued its succession and renewal activities, including by appointing Marina, Marina Go as a Non-Executive Director in December of last year. And I welcome Marina to her first Annual General Meeting for Transurban. Marina's diverse experience and expertise are contributing to a Board that collectively possesses the key skills, experience and attributes as you would expect, required to effectively govern Transurban for the future. Marina is standing for election today, and she will address the meeting later. In addition, Peter Scott is standing for reelection today. Peter is a highly valuable contributor to our Board, and you'll also hear from him later in the session. As previously announced, I'm retiring from the Board at the conclusion of today's meetings. And the Board has elected Craig Drummond as the new Chair of Transurban effective from the conclusion of this AGM. And I worked alongside Craig, obviously, since he was appointed to the Board in July of 2021. He was most recently the CEO at Medibank and he brings to Transurban more than 30 years' experience in financial and regulated industries, service industries, and Craig has extensive experience across all facets of company management, including equity and debt capital markets, risk management and business strategy as well as customer experience. And I'm so pleased the Board has elected someone of Craig's caliber, and I'm confident the business is well placed to succeed into its next chapter led by Craig as Chairman. So Transurban is an exceptional business, and it's been a privilege to serve 14 years as a Director and 12 years as Chair in what has been a period of great evolution for the organization. In this time, Transurban has grown from a collection of 7 separately managed roads in Australia into a leading global infrastructure business with 21 assets, 3 countries, 9.7 million customers. We've entered new markets with acquisitions in both Queensland and in Canada. In the U.S., we opened our first Express Lanes on the Capital Beltway ring road around Washington, D.C. around a decade ago. And we have since created a network of more than 85 kilometers of Express Lanes servicing one of the most important and prosperous economies in that country with further expansions underway. In Sydney, we extended our portfolio to include two of city's most significant pieces of infrastructure, WestConnex and NorthConnex. These assets have transformed the way that people and freight navigate their way around their city and will create value for customers, the community as well as for you, our investors, for many years to come. In building our portfolio, we have formed partnerships with some of the world's and Australia's leading superannuation funds and infrastructure investors who appreciate the value that we create in our assets and have chosen to invest alongside us. These partnerships have allowed us to pursue opportunities both here in Australia and in North America. We've also had tremendous support from you, our security holders, particularly in the equity raisings that have underpinned our major transactions. Most recently, the $4.2 billion that we raised in October last year to acquire the remaining 49% of WestConnex from the New South Wales government, which, of course, took our total ownership interest to 50% and that of the Sydney Transport Partners consortium to 100%. It has been an important consideration for the Board to offer the fairest structure of entitlement offers to our investors, and we are pleased to once again demonstrate our preference for entitlement offers to security holders as we did in the funding of our first stake in WestConnex as well as what we did for the West Gate Tunnel project. On behalf of the Board, I once again, thank you for your support. Over the past decade, we've maintained an average concession life on our assets of more than 28 years through disciplined investment in projects and acquisitions such as these I've just mentioned that will generate distributions to our security holders over the long term. But the transformation of Transurban has stretched far beyond the growth of our portfolio. What was, at its core, an engineering business is now a business that leads the way in diverse areas ranging from customer and technology platforms to traffic forecasting, community engagement and partnerships. Transurban's focus and sustainability -- Transurban's focus on sustainability and reducing our impacts on the environment from project design to daily operations has seen the business consistently rated among the top performers in the infrastructure sector in global indices, such as the Dow Jones Sustainability Index and the Global Real Estate Sustainability Benchmark. All these outcomes are the result of the dedicated efforts of the Transurban team and its relentless focus on delivering on our strategy and creating long-term value for all our stakeholders. This focus has seen Transurban evolve into the robust and future-facing organization than it is today. As I say, it's been truly rewarding being part of that journey. Now I'd like to turn to our financial results for the year ended 30th of June 2022. In the first half of FY '22, traffic continued to be impacted by restrictions on movement related to the COVID-19 pandemic, particularly in our major markets in Sydney and here in Melbourne. While traffic volumes overall were broadly flat at 2 million trips per day compared to the prior year, pleasingly, traffic continued to grow as the year progressed. And in the fourth quarter, actually exceeded prepandemic levels. Now around 2.4 million vehicles use our roads on an average daily. Our September quarter results, which we released today, showed that continuing trend with traffic volumes improving to record levels, and Scott will elaborate on this in his presentation. Our proportional toll revenue increased by 5.7% year-on-year in FY '22 year to some $2.626 billion, mainly as a result of increased travel in the later part of the year as well as some new asset capacity in New South Wales. Proportional earnings before interest, tax, depreciation and amortization, EBITDA, excluding significant items, increased some 3.5% to $1.9 billion compared to the prior corresponding period. Free cash increased by 19.8%. And as a result, we paid a full year distribution of $0.41 per security, which was a 12.3% increase on the previous year. That meant that more than $1.25 billion was distributed to security holders in FY '22. And then after 2 years of uncertain economic conditions driven by the pandemic, the Board was pleased to be able to provide distribution guidance for the current year FY '23 at the time of announcing our FY '22 results. And we expect to pay a distribution of $0.53 per security this year, which represents a 30% increase on the FY '22 distribution. This guidance reflects the improved traffic performance and the benefit of toll price escalations which are linked to the Consumer Price Index. And as previously disclosed, our guidance is subject, of course, to things like traffic performance, macroeconomic factors, our distribution policy as well as timing of distributions from subsidiaries. But in the current economic climate of both rising inflation and interest rates, Transurban remains very well positioned to grow our revenue and our distributions. The structure of our concession arrangements means that we have significant built-in inflation protection with some 68% of our revenue is actually linked to CPI escalations. And on the other side, around 96% of our existing debt book is fully hedged, which reduces our exposure to current market interest rate volatility. And in FY '22, we refinanced more than $3.4 billion of debt, which actually lowered the weighted average cost of debt. So the balance sheet is in a strong position and can support both near- and longer-term growth opportunities. Combined with a positive trend in traffic performance and project delivery, we think Transurban has a very meaningful base for generating cash flow. Transurban's capital strategy, of course, seeks to balance long-term value creation while maintaining distribution growth. Our assets are first class. And along with our pipeline of developments and opportunities, the group is confident in our ability to continue to deliver value for all of our investors and our other stakeholders. So during the 2022 financial year, the group also achieved significant development milestones. Once again, these accomplishments were delivered against the backdrop of the pandemic and its uncertainties, particularly during that first half of the financial year. To successfully progress such large-scale projects is testimony to Transurban's resilience and capacity to adapt to swiftly changing conditions. And these qualities remain hallmarks of how the group goes about its business. We're now only months away from opening the next stage, the next critical stage of WestConnex in Sydney, the M4-M8 link. And in the United States, we've progressed projects that will further enhance and extend our Express Lanes network. We also, as most of you know, reached agreement on revised delivery terms for the West Gate Tunnel project with the Victorian government and the project's design and construction subcontractor, including a new completion date of late in 2025. After the disappointing delays and additional costs, this project is now well on track. And it's a critical transportation project for Melbourne, as many of you know, and remains a financially attractive investment for Transurban that will create value for security holders for many years to come. Major infrastructure projects such as these are the most obvious way that we deliver on our business purpose, and that is to strengthen communities through transport. However, we also work towards achieving our purpose through activities that span the breadth of our business. During FY '22, we continue to make significant progress on a number of environmental, social and governance initiatives, ESG initiatives, that reinforce our sustainable business practices as well as our commitment to reduce our greenhouse gas emissions. We are now sourcing 2/3 of our electricity for all Australian operations from renewable sources, which has led to a 46% reduction in greenhouse gas emissions compared to the previous year. We continue to pursue opportunities to improve energy efficiencies across all of our assets and are on track to achieve our 10% energy-efficiency target by the end of FY '23. Recently, our 25-year-old M2 motorway in Sydney was awarded an operations rating of excellent from the Infrastructure Sustainability Council, which evaluates the economic, social and environmental outcomes of infrastructure. This is our first operating asset to receive a sustainability rating. And again, it's testimony to the way in which we continuously improve our assets to achieve better outcomes through initiatives such as energy efficiency measures. Over the life of the M2, we expect to almost halve our greenhouse gas emissions compared to the base case. Our West Gate Tunnel project also recently received the highest possible recognition of leading for its design from the Infrastructure Sustainability Council and is the largest project to complete an IS design rating. While these are excellent outcomes, we also recognize that vehicle emissions are a significant contributor to greenhouse gas emissions. By choosing our roads over alternative routes, drivers save an average of 27% in greenhouse gas emissions. However, we are focused on educating our customers to drive more economically to further reduce fuel consumption and emissions. In February this year, we released a report that outlined the findings of a trial using an in-house in-vehicle device to monitor driving behavior. Trial participants traveled 700,000 kilometers and achieved a 5.5% reduction in fuel and greenhouse gas emissions. This year, the need for action to address climate change has been put sharply into focus with widespread flooding in Queensland, New South Wales and of course, sadly, more recently in Victoria. Our roads are designed and built to keep cities moving and their ability to support disaster responses and other emergencies will become increasingly important in the future as will their role in supporting safe access and movement of affected communities. We continue to address the recommendations of the Task Force on Climate-Related Financial Disclosures to better understand the risks and financial implications that climate change may present for our operations and our assets. Finally, I'd now like to comment on our remuneration framework. The Board was concerned last year to receive a 25.74% vote against the remuneration report at our 2021 Annual General Meetings. So during the past 12 months, the Board is focused on deepening its understanding of security holder concerns. And on behalf of the Board, I thank those of you who took the time to speak with us. Listening to our stakeholders, our consultation found a diversity of views, of course, regarding executive remuneration. The Board also understands that it needs to ensure appropriate performance-based remuneration, including sufficient leverage to motivate, incentivize and retain the executive talent required to deliver our business strategy. As a result, further refinements were made to our remuneration approach in addition to those already approved as part of the ongoing review of Transurban's remuneration practices. And these changes, of course, are outlined in detail in our FY '22 corporate report and include changes to both short- and long-term incentive plans for the executive team. So ladies and gentlemen, this concludes my presentation. But before we move on to a short video and to Scott's comments, I again would like to take this final opportunity to thank you, our security holders, for your support. I know the Board is looking forward to achieving many more milestones under Craig's guidance as Chair. And to the wider Transurban team that has demonstrated the highest level of professionalism, particularly during the past few years, I sincerely thank you for all your efforts and your commitment. And then before I hand over to Scott, I'd like to play this short video, which features some of our project highlights over the past year. Thank you. [Presentation]

Thank you, Lindsay, and welcome, everyone, and it's good to see so many people in person. I would like to start by acknowledging Lindsay for his exceptional contribution to Transurban through this transformative time in the company's history. And I know the Executive Committee, which I think is all here in the front row, so hopefully, you had a chance to meet some of them after the break. The Executive Committee and I have valued his leadership and guidance over these many years. And so on behalf of the Board and the whole team at Transurban, Lindsay, we wish you the very best for your future endeavors. And as you've seen from this video that we just played, we are making some significant progress on our major -- pipeline of major projects. And these projects will create productivity and quality of life benefits for our cities through safer, faster and more reliable travel for decades to come. To put some of that in perspective, the link between the M4 and the M8 tunnels, which you saw some of those pictures in Sydney, which will open early next year, will save motorists traveling from Parramatta to the new Sydney Airport around 40 minutes in travel time and they will bypass up to 52 sets of traffic lights. And here in Melbourne, the West Gate Tunnel project will save motorists about 20 minutes in travel time between the city and those western suburbs. And we're very excited about the progress we've actually made on the project with the tunnel boring machines now more than halfway through digging the twin tunnels and we are on track to open in 2025. As well as seeing these great projects, it's also fantastic we're actually seeing that our cities are moving again. A lot of you would have experienced some of that traffic over the last few months. And as Lindsay mentioned, our final quarter results for FY '22 showed traffic volumes reaching an all-time high. And this was supported by the new assets in Sydney, including NorthConnex, the M8 and the M5 East, and customers are seeing some real value in the significant savings in travel that these roads are offering. And what our September quarter results have showed, which we released today is that we've surpassed those results and they now represent our strongest quarterly traffic numbers yet. And Sydney traffic continues to grow, and it was up over 18% above prepandemic levels. And that's despite what we've had is the 4x average monthly rainfall in July which significantly impacted people's movements. Brisbane traffic is up over 7.6% on pre-COVID levels, and weekend traffic is proving to be particularly strong, up by almost 10% right across the network. But this was most evident on the Logan Motorway which had over 20% increase in weekend traffic, and that's due to the increasing tourism down to the Gulf Coast, but also the result of more capacity following our major enhancement project that we did a couple of years ago. And while traffic in Melbourne is still recovering, we expect it to grow over time, particularly as more employees are now returning to their workplaces with the relaxation of the mask rules and the lifting of the government's recommendations to continue to work from home. And in the U.S., traffic levels on the 95 Express Lanes continue to rebound as government employees are returning to their workplaces. And traffic on the 95 has increased by more than 13% on prepandemic levels. And this has also been supported by strong weekend and interstate travel in that corridor. And what these trends are reinforcing is the research findings of our latest Urban Mobility Trends report that show people use our roads for a variety of reasons, including traveling to social events and holidays as well as commuting. The research found that -- of the -- 16% are respondents who use our roads to commute to work, on average, people are traveling to the workplace about 3.5 days a week, and this includes our inner city workers. However, many of these have changed their preferred mode of travel with almost 1/4 of the respondents in the survey of over 5,000 people said that they've changed their commute to work from switching from public transport to private vehicles. And people expect their travel choice to remain consistent at least over the next year. Now while people use our roads for many different reasons, most use them infrequently, actually, which is reflected in the spending patterns that we see. The average weekly spend for our Australian customers is $6.70, and 82% of our customers spend less than $10 per week on tolls. Our research also showed that most people do not or only, very occasionally, consider the price of fuel when they take into account either short trips or commuting. And this is a trend that we have observed over the past decade with traffic levels remaining resilient to fluctuations in fuel prices. In Australia, our research also showed that the top factor of choosing a toll road is reliability of travel times. And pleasingly, travel time savings on most of our roads, again, are back to prepandemic levels. And in this last financial year, customers saved around 323,000 hours each workday compared to using an alternate route. An efficient travel is a key value driver for our freight customers, and we continue to see heavy vehicle traffic numbers grow as they rely on our roads for the most direct route to service hubs and ports and other distribution centers. And in Melbourne, where the container movements at the port are now 23% higher than prepandemic levels, we saw record volumes of heavy vehicle traffic in the September quarter. The increase in freight movements was consistent across all our Australian markets with average daily large vehicle traffic up more than 9% compared to prepandemic levels. And this is, in part, being delivered by online shopping and other demands for on-time deliveries and logistics. Further research findings and our latest Urban Mobility Trends report are available on our new Insights hub on the Transurban website, and I encourage you to visit that if you have some time. Now this hub covers a broad range of data-driven insights, which we publicly share because we want to contribute to transport planning and improving our city's transportation network, providing that data and that research. So we've seen the traffic grow. But in addition to that traffic growth, I would like to reinforce Lindsay's comments that we are very well positioned in the current macroeconomic environment of higher inflation and higher interest rates. This is due to our long-term prudent balance sheet management and our embedded inflation-linked to all escalations. Now we're seeing some of the increases in tolls and already as a result of inflation, which was announced earlier in this calendar year. However, the embedded adjustments in our concessions occur at different times across our assets and more recent inflation adjustments, which have been larger, will come through later this financial year and into FY '24 as you can see on some of these charts on the screen. And these escalations will have a long-term effect in rebase revenue for future growth. As Lindsay said, Transurban has come a long way in the past decade and is almost unrecognizable, but we have always had a very unique business. As a toll road developer, owner and operator, with our own customer base, our own in-built tolling systems, our business spans every single aspect of our sector. We have a direct workforce of over 3,600 people, and many of them are global leading experts in their field. And we have another 5,000-plus subcontractors working on some of the most largest and most complex infrastructure projects, not only in Australia, but throughout the world. From our traffic forecasters and data scientists to our customer experience and community consultation specialists, we do have an exceptional team at Transurban. And as custodians of assets with the concessions of up to 65 years remaining, we take a very long-term view on how to grow value for our investors and create last thing benefits for all of our stakeholders. Now for our customers, that means consistently exploring ways to improve their experience both on and off the road. Our Australian roads have been independently rated as being up to twice as safe as like roads, and this is a result of data insights and roadside technology capabilities, including some of the world-leading state-of-the-art control rooms, CCTV, road sensors and a fantastic incident response team. And over the past 2 years, we have reduced the most common types of crashes on our road, that being rear-end collisions by 10%. And a small example of how we've used data to improve safety outcomes are the recent signage and line marking improvements near the final exit before the Domain Tunnel entrance here in Melbourne. We source data directly and anonymously from connected vehicles GPS systems, and we verified a concerning trend of sudden braking or swerving near that exit. Now by giving drivers clearer and more advanced warning of the exit rear-end crashes have dropped by 75% over 9 months in that position. Now off-road, our focus is on providing a seamless experience for our almost 10 million customers. The vast majority of whom choose to interact with us via digital tools such as our apps. We also continually upgrade our back-office customer tolling platform to improve and simplify the customer experience and reinforce a reputation as a leader in the transport technology. Again, a small example of this is we implemented live incident alerts within the Linkt app to notify customers about any traffic delays and give them confidence that choosing our roads means a quicker, safer and more reliable journey. We've also encouraged our Linkt customers to take advantage of fuel discounts available through our customer rewards program. And our fuel discount program has saved customers more than $3 million since we first launched it. Next month, we'll have another competition with a prize pool of more than 3 years' worth of fuel for our customers to help them as well. At the same time, for those customers who are facing hardship, we continue to offer support through our First Time Forgiveness program in the U.S. and our Linkt Assist program in Australia. Now our sort of unique experience and conglomeration of capabilities allows us to respond to the challenges and the opportunities that are being imposed by our growing cities and a rapidly changing transport sector. And in turn, we believe this benefits the communities and our government partners. The latest government population forecast estimates Sydney to grow by around 22% by 2041, with higher projections for the outer areas such as South West Sydney, which is expected to increase by over 40%. Melbourne is also still expected to grow substantially with prepandemic forecasts predicting it will eventually overtake Sydney's population. And demographics such as these, this is why WestConnex and West Gate Tunnel projects are so critical to keep these cities moving efficiently and why we're so pleased with both those investments. Now another project that addresses Western Sydney's rapid population growth is the widening of our M7 motorway, which Lindsay mentioned. It will connect to the future M12 motorway, which will lead eventually to Western Sydney's International Airport, which is now due to open in 2026. Now actually, the need for this project was identified by our in-house traffic modeling team some years ago. You can see from the charts on the screen that the areas of congestion indicated in the yellow and red have grown significantly over the past 5 years. And then working with the government, we are now in the final stages of their unsolicited proposal process. And subject to final approval, we expect this project to start in early '23 and will take around 3 years to complete. South East Queensland is also becoming one of the fastest-growing areas in Australia, with the population forecast to increase by more than 40% by 2041 as well. And increasing the capacity of transport networks will be essential to keeping that region moving efficiently, and we look forward to working with the government on some potential solutions and in particularly supporting the 2032 Olympic Games preparation. And in North America, the Fredericksburg Extension project, which again, extends our 95 Express Lanes by 16 kilometers is anticipated to open next year. And once complete, it will create the longest reversible Express Lane system in North America spanning approximately 80 kilometers from Washington, D.C. down to Fredericksburg, Virginia. And in March this year, we are very excited to start construction on the extension of the 495 Express Lanes, which takes us right to the border of Maryland. Now it has been a decade since we opened the Express Lanes, the 495, and I was here, and that was a very exciting time to increase the capacity of the U.S.' most congested corridors and was quite a unique process and quite a unique experience with the Express Lanes. But since then, we have served more than 9 million customers across that 85-kilometer network. And by 2025, when the latest extension projects are complete, we estimate that the total economic benefits of these Express Lanes to the state of Virginia will exceed USD 8 billion and will have created more than 53,000 jobs. Finally, in the U.S., the last steps of the environmental review process for Phase 1 South of Maryland Express Lanes project was successfully reached. We're proposing this project as part of our Accelerate Maryland Partners. And while the project still has a long way to go, work is underway on early development and design. And the project proposes to add high-occupancy toll lanes alongside our general purpose lanes and create an option for faster and more reliable travel in a region that suffers some significant congestion. We have selected a team led by a U.S. construction company, Tutor Perini, as design and construction contractors for Phase 1 South. And we're now working with that team to drive value and efficiencies in the project's design, pricing and delivery through the early development in order for us to submit a committed section proposal and execute a design and construction contract. So we're very busy, and there's lots of interesting things going on. But beyond these immediate projects, we have a range of opportunities from enhancements of our existing assets and networks to acquisitions and large-scale greenfield projects that will span over a decade. Both Australia and North America still have large backlogs of infrastructure projects that were needed to be delivered to retain livability standards and productivity. We believe there's further opportunity for government to leverage private sector capital and expertise to ensure that this infrastructure development can keep up with demand, particularly at a time when government budgets have been stretched as they have supported the community through this pandemic. On this point, research in June by the industry peak body infrastructure partnerships, Australia found that almost $50 billion worth of projects could be built using private sector capital in New South Wales and over $83 billion across Australia. We also found strong support for governments using a mix of private and public investment to deliver critical infrastructure in our, again, mobility trends research. Almost 80% of respondents favored approach -- an approach which combined government and the private sector for investment on delivering infrastructure. Now despite this major backlog of infrastructure projects, record levels of development are underway in Australia. This is expected to peak in 2024, and this has led to a critical shortage of skills in the infrastructure sector as it has in almost every sector. And recently, I got to participate in the Federal Government's Jobs and Skills Summit, which was an excellent opportunity to try to address this issue and discuss ways we can attract the skills we need to deliver Australia's infrastructure pipeline. And as a result of the summit, the federal government announced an increase in Australia's permanent migration program, and this is a move we strongly endorse to address the pressing workforce demands. However, we obviously acknowledge there's -- a lot more needs to be done to upskill our Australian workers to support the economy for the long term. And we're working with our construction partners to provide apprenticeships and skills training to thousands of workers on projects such as WestConnex and the West Gate Tunnel project. We have a purpose-built WestConnex Training Academy, which has delivered training to more than 1,500 workers, apprentices and trainees and something that we're very proud of. And we also advocate for greater participation of women in the infrastructure sector. And while the national average for female construction participation is an abysmal 12%, ours is 21% on the WestConnex M4-M5 Link tunnel project. So while almost double, there's still a lot of work to do. And we're very pleased that a female project Director leads our largest project under construction, the West Gate Tunnel project. And in Sydney, 26% of the senior roles on the M4-M5 Link project are filled by women. However, our long-term commitment to gender equity is evident right across the business, including our executive team, which has a 50-50 gender balance. And this year, we're pleased to have been recognized again with the Workplace Gender Equality Agency Employer of Choice citation, which makes it the 9th year in a row that we've received that citation. We also ranked 2nd in Australia and 8th globally in a survey on gender equity in the workplace, which assessed more than 4,000 companies on a gender criteria. And our gender pay gap is less than 1%, and we have maintained that gap of less than 1% now for over 5 years. Earlier, I spoke about the Urban Mobility Trends report as one of the ways we monitor new and emerging technologies that impact our business as well. We work with governments and industry to explore developing areas of policy. And you see us talk a lot in the press and the media such as things on road funding, connected autonomous vehicles and all kinds of new technologies. I'm very excited because next month, we'll actually be running trials at a fully automated truck on a dedicated motorway lane here on Citylink. And this trial will be the first of its kind in Australia. And we've imported this truck from a leading technology company and will be trialed on the road and tunnels at night, obviously, when it's quietest. But the trial will help us understand the ways roads and on-road technology can be future-proof to help keep freight moving in smart, safe and efficient ways. This will ultimately support the growth of our city's economy and in the population. This trial will build on our experience of running trials of connected and autonomous vehicles, private vehicles, that we ran in all of our Australian cities over the last few years. And I really look forward to sharing much more on this trial in the future and look out for this in our announcements in the media. But to conclude, I would like to, once again, thank Lindsay as well as the whole Board for their continued support and guidance over this last year. I would also like to take the opportunity to congratulate Craig on his appointment to Chair of the Board, and the executive team and I are looking forward to working with Craig who obviously is a former CEO and an has extensive background in the financial sector and large customer-focused organizations. Thank you to the entire Transurban team for your outstanding contributions this year and some of you in the room. Thank you very much. And we've achieved so many milestones in very difficult circumstances. And finally, thank you, again, as Lindsay said, to all our security holders for your continued support over so many years and I look forward to speaking with some of you after this meeting. Thank you, Lindsay.

Thanks, Scott. So transcripts of both my address and that of the CEO are available on the Transurban website and on the ASX company announcements platform. Before we move to the formal business of the meeting, I will begin by outlining the procedures for today's meetings. These are security holder meetings. As in past years, our new security holders, their attorneys, proxies and corporate representatives are permitted to vote or to ask questions. With the hybrid meeting format this year, there are 3 ways questions may be asked. For those here attending in person, you may ask a question if you hold a blue or a red card. Please make your way to a fixed microphone point and provide your name to the microphone attendants. If you're unable to make your way to the microphone, please raise your hand, and we'll get that roving microphone to you. If your question relates to a particular item of business, please wait until we come to that item of business. For those attending online, you may either submit written questions through the platform or you may ask your questions verbally by using the audio questions facility. [Operator Instructions] Written questions can be submitted at any time. However, I will not address them until the relevant item of business is before the meeting. Written questions may be moderated to avoid repetition. And if questions are particularly lengthy, we may need to summarize them in the interest of time. If you have a written question already prepared, please submit it now on the platform so that I can answer as many questions as possible when I come to that relevant agenda item. If you're tuning online and wish to ask a question verbally, you will need to follow the instructions below the broadcast window. We recommend that you wait until the commencement of the relevant item of business before connecting to the audio questions line in order to minimize the time queuing to ask your question. Questions which may be moderated will come through to me as Chair of the meeting, and I will either answer them myself or pass it to the most appropriate person to answer it. If a security holder has a question that relates to the virtual meeting technology, please contact the helpline detailed in our AGM online participation guide, which, of course, is published on our website. To enable all security holders a reasonable opportunity to ask questions, you are requested to ask one question at a time. And please keep your questions short and to the point so as many people as possible have the chance to ask a question as there may not be sufficient time available to address all of the questions raised otherwise. Please ensure your question is relevant to security holders as a whole. If you have any questions on the preparations on the presentation so far or on Transurban in general, please either submit them or connect to the audio questions line now. We encourage security holders to submit questions in advance of the meetings, and I'll now address some relevant questions. Fiona, would you like to read out the first question?

Chairman, we have a question from [ Mr. Peter Parsons ]. There are 11 Board members, 3 of whom are women. Women are 52% of the population. Why are directors unable to find 6 capable women to serve on the Board?

Thank you, [ Mr. Parsons ], for the question. So when we think about Board renewal, and we've obviously been through a lot over the last 2 years at Transurban, then we think about a lot of things. What are the skills that we need, what are the skills that we might be replacing in terms of directors that are leaving, what's the experience of the relevant people we might be considering for the Board role and, of course, diversity, including gender diversity. So all of this is part of the evolution, I suspect. So we -- once I retire at the conclusion of this AGM, we'll be back to the target that we have of 30% women on the Board, so 3 out of 10, but we are working towards the 40-40-20 mantra, which is right across the organization. And indeed, if you think about the directors in the last 2 years, there's been 5 of them. And 2 of those, Patricia and Marina, are of course women. So that's at the sort of 40% target. So it does take time, but we're very conscious of every aspect of skills, experience and diversity when we choose our new directors.

Chairman, we have received the following further questions from [ Mr. Peter Parsons ] relating to political donations. What is the -- what benefit did owners receive from the $357,620 in political donations? And why is this an appropriate use of owners funds? What is the amount and to whom were political donations made outside Australia? And will the Board start publishing political donations in the annual report?

Political donations. A lot of misinformation around political donations. For [ Mr. Parsons ], he's just quoting something he's read. But this company doesn't make political donations. Transurban does not make political donations. What we do though, and this is disclosed both in our corporate report and on the website, is like most companies in this country, we do subscribe to the public policy working groups, if I can call them that, of both the conservative side of politics and labor. So there are monies paid to those organizations, but purely to get in the forums, which discuss policy, which relates to our sector, which relates to transport and infrastructure generally. So the amount of money spent is about $70,000-odd in relation to the Australian. In this -- of the year FY '22, about $70,000-odd. In the U.S., a little bit higher USD 130,000. But that's all on our -- in our corporate report and on our website. As I say, we don't make political donations. Sometimes the reporting of this gets very confused. I think [ Tim ] [indiscernible]. So the [ Business Council of Australia ] is one of our political donations according to one survey and so on. Of course, it's not a political entity at all, institution at all. There's other reasons why the number reads high, but it's not political donations.

Chairman, we have received the following question from [ Mr. Peter Flynn ], what is the future of Sydney roadways once all the tolls -- all the tunnels and overpasses are completed?

Gee, that's a big question. Future Sydney roadways when all the current works are completed. Well, I guess you can ask that lots and lots of different ways. But the way I sort of think about it is if you think about Transurban's vision in terms of strengthening communities through transport, whilst I suspect the New South Wales government doesn't use those same words, Scott, though that's effective what they're trying to do with the whole network in Sydney. And obviously, we're a major part of that with our roads, but not all of it by any stretch of the imagination. So I suspect when they are all finished, then the network will work much, much better. And combine that with just the advances in technology, the advances in terms of there'll be more sustainable roads in terms of the way in which they're built, as I say, the use of technology, there'll be safer roads you would expect as a result of that. But Scott, I don't know if you've got anything to add to that?

Yes. Clearly, there is a group of assets that have been completed that New South Wales has defined in its transport plan. There's a longer-term transport plan and more integrated transport with the roads, rail, active transport. There will be future widenings that will need to be done based on the forecast that we can see. But as Lindsay said, pointing out of technology and use of technology over the next couple of decades to make the road safer, more efficient and provide additional capacity. So we still see decades of additional enhancements, opportunities through either the use of physical enhancements, but also use of technology enhancements. So it's still a very exciting sort of sector for us in relation to all of the cities. And the thing that really is beneficial to us is the demographics in the cities that we've chosen to invest in. All are very strong, whether it's Northern Virginia, Brisbane, Sydney, Melbourne, Montreal, they very have strong long-term growth characteristics. And we'll need to help solve their transport problems, and that will become more integrated over time. And so it's actually a pretty exciting time for us in the infrastructure space.

Thank you. Fiona?

Thank you, Chairman. We have received the following question from [ Mr. Nicolas Buckley ]. What additional steps can Transurban take to reduce the risk of e-mail and text scans claiming to be unpaid invoices from Transurban?

Yes. Thanks, Fiona. Thanks, [ Mr. Buckley ]. That's probably a question on many people's minds. So these, of course, and many of you will have been recipients of these, these are scams, which have -- are put on to you as our customers. They're actually coming through Transurban systems, which is a good thing for you as an investor in Transurban. So it's not as though our systems are coming under attack. But you will have got these presumably -- many of you have got them from other service industries in terms of your bank or perhaps your medical -- private medical provider and whatever, where the scammers are attempting to get data out of you and to open up an attachment so that you give him or her the access to banking details and so on. So what we're doing is a couple of things. One, as soon as we are aware of these scams and putting out the notices to you, hopefully, in terms of text messages directly to you as a customer or on our website, how to deal with it, how not -- urging you not, obviously, to open up the attachments and so on. The big deal here, I think, really is more with the telco providers. So the telco providers and telco regulator, they are the people that can actually block the phone number that's actually sending you the message. And obviously, we're in constant contact with them. They are the people that can pull down the malicious websites that are pretending to be Transurban. So we do work very closely with the telcos on that. But Scott, I don't know if you got anything to add to that.

Yes. We do work with the telcos and the regulators. So we're working on that. We shut down thousands of -- or block thousands of the URLs, which is the sites they try to get you. We've send out over 5.1 million e-mails and communications to hopefully our customers, the ones that we do have their e-mail address, to try and notify them of what the scam may look like and how we would formally communicate with you. Obviously, we have that information on our website if you're any doubt. And so we're trying to do everything we can. We realize it's an inconvenience, and it's an impact on all of us in the industry. So the industry is very much alive to it, and we're working as hard as we can, and we spend a lot of time on it. So apologies for getting the nuisances. They're not coming from us. But please, if you have any doubt, come to our website, and hopefully, you will receive our communications.

Thank you.

Chairman, we've received no further general questions in advance of the meeting.

Thank you, Fiona. Then I'll now take questions on the presentations or Transurban in general from security holders here in the room. So are there any questions from those attending today? Thank you. Microphone #1.

Thank you, Chairman. We have a question from Michael Muntisov from the Australian Shareholders' Association.

Thank you. Michael, welcome.

My name is Mike Muntisov from the Australian Shareholders' Association. Today, I represent 441 shareholders and a total of more than 3 million shares in Transurban. Firstly, Chairman, as you're retiring at this meeting, the ASA would like to acknowledge the growth of Transurban that's occurred under your tenure. As a simple measure, for example, the market capitalization of Transurban has increased more than fourfold under your watch. The ASA has found you responsive to the needs of retail shareholders. And we valued your openness and transparency in forms like this. Thank you for your contribution.

That's very kind. Thank you.

Now to my questions.

That was the good news. Now is the bad news, but that's all right.

For a company like Transurban that invests in major engineering projects and carries significant construction risks, Board expertise in engineering and project management is important, yet only 3 directors out of 11 have a genuine depth of knowledge and experience in this area. What is the Board's plan to enhance the Board's expertise in engineering and project management? And does management itself have sufficient depth of expertise in engineering and construction.

Yes. Thank you. It's very, very good question. So the answer is we believe we do have the right amount of expertise, both at Board level and at the executive level. So remembering that we are not a construction company, we obviously are a major development of projects as we've been talking all through the morning, but we're not the actual construction company, but it is really important for the reasons you said that we need to have expertise at both those levels to monitor what's going on these ongoing projects. So there are 3 deeply involved. So Peter Scott, who is standing for election today. Peter is one of them, a really extensive background. And we call on Peter, whilst all of our decisions are a collective Board decision, on these areas, then we look to Peter for his expertise. Same for Mark Birrell. Mark, a different sort of background in infrastructure, not being an engineer, but immense experience in infrastructure in all sorts of different ways. And of course, we've got our CEO, who, amongst other things, is a qualified engineer and very good at these issues. And then obviously deep down through the organization, he was here, his team. And obviously, many of the people that work in the various states under Sue or Michelle or under Henry, then we've got that expertise in there. And in terms of the Board deliberations, all of those people come into the boardroom and talk to us about what their observations are supporting the papers that we're looking at. But I think -- and this is for Craig and the rest of the Board to consider in the future. It's not lost on us that probably the next time we go somewhere, Craig, it may well be into that area in terms of the depth of the skills in that area. Thank you. Any other questions from the floor?

Thank you, Chairman. We've got John.

My name is [ John Power ], Chairman. Sorry about that delay. I didn't have the blue card.

Thank you, [ John ].

Firstly, I've been a unitholder for a lot of years now, and I'd just like to say thanks to you as well over many years, and Mike Muntisov has just given some figures on it. My understanding has been that you and the MD have had a very close and very successful working relationship. So I really hope the new MD and -- sorry, the MD and the new Chairman.

Yes. I thought you're making an announcement. I thought you're making an announcement there for us, [ John ].

No. I wasn't suggesting that at all, I'm sorry. No, no, the MD and the new Chairman have such a good relationship. I have a couple of questions, but the first one relates to the West Gate Tunnel. I read a media report a few weeks ago that the soil from the tunnel was not badly contaminated at all. And in fact, it met all standards. And so all the delays, all the billions of dollars of costs or the protest, the whole thing was completely unnecessary. So is this correct? And if so, who is responsible for such a huge stuff up?

So thank you. So it is correct that there are very low levels of PFAS and that was the chemical that everyone was worried about. There are very low levels of PFAS to date. It may change, obviously, as we continue through with the tunneling, have been found in the tunnel project. But the issue is that after the signing of the West Gate Tunnel contract with both the government and the contractor, then the EPA changed the rules in relation to how much PFAS could be contained in the soil for it to be regarded as contaminated soil. And there are only very few sites that are set up to take that amount of soil. So that's what caused the issue. And there were extensive delays in getting availability of a site and a site approved before the soil can be taken there. So that's fundamentally the reason why it went on for some years and obviously at some considerable cost not only to Transurban, but to the government and to the builder.

But did you expect the soil is okay? And did someone just stuff up the analysis or -- what happened?

No. It's because the rules changed, yes. So the rules have changed. So as you can imagine, before the contract is signed, then there is testing of the soil. That would be the right thing for the construction company and Transurban as the sponsor as the developer to test the soil. All the results of those tests were that the soil was under the limit of required by the EPA. But then the EPA took it from that limit down to here, then we had a different view, Scott?

Yes. Unfortunately, because the EPA changed the rules and the testing requirements, so the amount of soil coming out of the site, you need to store the material before you can test it. So the issue is you only had 20 -- basically, you have 24 hours of material storage and it could take up to 20 days to test the material. So to be able to have a place to store and test the material and to determine whether it's contaminated or not, you have to have a specific site. So whether the -- unfortunately, whether the soil is contaminated or not, we had to develop a site given the change in the rules to be able to test it. So to Lindsay's point, the EPA's change of rules put us in a position that we have to get a site, that took a long time in the process. So yes, there's been low levels of contamination. And in fact, the actual contamination we found is at the very low levels, but we have found some. But we needed to have a dedicated site to be able to have the time to test it because once production of the TBM start, you can't stop them, so an unfortunate situation. But we thought, along with the government and the contractor, better to negotiate a commercial outcome than spend a decade in the courts working out where we'd get to.

I do have a second question and I'll ask it very quick. Atlas Arteria recently put a big investment into this -- there's a Chicago Sky Loop (sic) [ Chicago Skyway ], I think it's called. Did you have a look at that?

No, we didn't. And we didn't because it's not effectively -- not on strategy for us. So we are very -- I think one of the things that investors like about Transurban is very clear in terms of the markets in which we operate and who we partner with and where we spend our money so that -- we do look at other areas within North America. So we're not just restricted to Virginia, Maryland and Toronto -- sorry, into Montreal, but no, not a particular road. Thank you. Any other questions in the room before I go to online. So any questions online, please, Fiona?

Chairman, we have received the following question from Mr. Stephen Mayne. Best practice these days is for companies to disclose the proxies to the ASX, along with the formal addresses. For instance, Steadfast Group did this today, and Origin Energy has been doing this since 2008. Given your past excellent track record on transparency, such as with participating rates in capital raising, will you commit to doing this next year? Also, did any of the proxy advisers recommend a second strike on the remuneration report? And were you surprised by the proxy voting outcome?

Stephen, sorry, you can't be here, but I'll [ speak ] to you online. So no, we're not lodging the details of where the proxies stand at 8:00 in the morning, and I don't think that will be for the Board to decide in the future. But I suspect if discussions go the same as we've had in the past, we won't be doing that in the future either. I'm not sure it is best practice. Some companies would like -- they might be doing it. We don't think it's right. We think it's better to wait and to hear from -- hear all the discussions at the AGM in relation to resolutions before we put up proxy voting results. We just think that's more respectful for people in the room and participating in the meeting. So that's our policy. In terms of proxy advisers for this year, now all the proxy advisers, including the ASA, who Mike, I'm sure, will speak to this later on, have recommended to vote alongside of our recommendations. So they've recommended votes in favor of all of the resolutions 2, 3, 4 that you're about to go through today. Was there any other subpart question I have not covered?

Chairman, we have received a further question from Mr. Stephen Mayne. How do we keep getting away with paying no corporate tax in Australia? Our utilization of tax losses fell from $276 million in 2021 to $193 million in '21, '22. In 2015, James Packer told the Crown Resorts' AGM, I think people should be asking why Sydney Airport and Transurban aren't paying any more tax. 7 years later, when you are still paying no corporate tax, what is the answer to James Packer's question? Isn't it time we ditch the tax-effective stapled trust structure and just became a regular company with less tax-driven gearing and aggressive depreciation and instead have proper participation in the dividend franking system?

Stephen, Stephen, we're not getting away with anything. So I think I've addressed this in this forum before, but it's a really important point. So thank you for raising it again. So the fact of this is that Transurban as everyone, as every security holder knows, invests in long term, either by acquisition or development, huge long-term infrastructure project. That requires a lot of upfront capital, and you've been kind enough to support us on that all the way through, a lot of upfront capital and the profile of revenue from those roads, particularly if it's a greenfield road like West Gate Tunnel, builds very slowly and then up over a long concession period of 25 years or plus. So what that means is that because we are able to depreciate those assets from when they've completed, then Transurban makes losses in the early years, and it makes accounting losses and it makes tax losses. If we didn't have the structure that we have, which is the staple of the share and the trust, then we would not be able to pay distributions because you cannot pay distributions, dividends to shareholders out of losses. So the trust staple is set up for all the right reasons. It's absolutely common all around the world in terms of infrastructure companies for the reasons I've said. And it works absolutely for investors. And so [indiscernible] delivery, not paying tax, in fact, some of our subsidiaries, these distributor for one, as a company, it pays tax. You know, as recipient of the dividends, that you then have to pay tax on your distribution. So it comes through the trust, it's not taxed in a trust with the way trust work. But once it goes to you as a distribution, it's taxed by you as a receiver. And I think Michelle and Scott, we probably think over $1 billion has been...

$1.5 billion.

Yes, $1.5 billion has been paid in tax that way. So the tax structure is absolutely right. It's absolutely as endorsed by the federal government as it should be and encouraged by the federal government for the reasons I've just said.