Transurban Aktie

Thank you for standing by, and welcome to the Transurban First Half 2026 Results Call. [Operator Instructions].

I would now like to hand the conference over to Craig Stafford, General Manager, Strategy and Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us for Transurban's First Half '26 Results Briefing. Transurban acknowledges the traditional owners of the lands throughout Australia, and we pay respect to elders past and present. We acknowledge our roads and infrastructure and built on country. And with deep respect, we incorporate the voices of First Nation peoples in our approach, supporting access to mobility across communities.

We're joined today by our CEO, Michelle Jablko; and CFO, Henry Byrne. And together, they'll take you through the presentation that we've lodged with the ASX this morning. We realize it's a really busy day today. The presentation should take about 20 minutes. That will leave us plenty of time for Q&A, and we'll do our best to get you to your next obligations.

I'll now hand over to Michelle to get us started.

Thanks, Craig, and good morning to everyone on the call. Over the past 2 years, we've been very deliberate in strengthening our foundations to set ourselves up for the next phase of growth, strongly focused on long-term value creation. We adapted our formula to reflect a world of higher interest rates and cost of living. And we've looked to reset our position as a partner of choice for government.

We've had 3 big opportunities to do this: New South Wales toll reform, delivering the West Gate Tunnel project and by investing in our 11.3 million customers, our most important asset, all while delivering the strong organic growth our security holders expect from their significant capital investments. And I'm really pleased with the momentum on all fronts.

Starting with our numbers. We grew revenue by 6% with traffic growing in all markets. We've worked hard to generate more value from the business we have. We have a much stronger top line in North America, our longest concession assets, and we're much more efficient across the board. Through our hard work, our costs are only 1.5% more than the first half of '24, well below cumulative inflation. We've grown half year distributions by 6.3%, 102% covered by free cash and maintained our guidance of 6.2% growth for the year. Henry will go through the details shortly, including a couple of timing impacts in the half-on-half comparisons that understate our performance and will normalize over the full year.

We're a great business, and I believe our strategic advantage will be further strengthened by combining our physical and digital assets, underpinned by our customer focus and our strong relationships. It's about getting the important things right in the right order. We've delivered very tangible outcomes this half. We opened the West Gate Tunnel and the 495 Northern extension, delivering real benefits to motorists and local communities. We've approached toll reform as a collaborative and long-term partner of New South Wales. We've continued to make significant investments in more personalized and transparent customer experiences. And we've taken decisive action to drive the top line and bottom line success of the business, knowing that our investors needed to see returns on the significant CapEx investments made in recent years. These have been our biggest priorities. And importantly, we've achieved these things in tandem.

Looking at traffic, we're seeing good growth across all markets, hitting 2.6 million trips a day. North America continued to perform strongly, up 3.6% for the half, even with the impact of the federal government shutdown. We saw traffic rebound quickly after the shutdown, and this was also helped by the opening of our 495 Northern Extension project in November. Brisbane continues to perform well with strong growth across both weekdays and weekends. And Sydney also delivered underlying growth despite heavy rain throughout Q1.

We're seeing an improvement on CBD assets in Sydney as we start to see traffic distribution normalize across our assets. In Melbourne, traffic grew 3%, bolstered by growth in airport passenger volumes and port movements. And West Gate Tunnel traffic continues to build with more than 1 million trips taken since opening, 20% of which have been heavy vehicles in the tunnels.

We're now firmly focused on the final outcomes of toll reform. We're building on solutions proposed by the New South Wales government in December, which will deliver clear benefits for motorists in the state and protect the $36 billion that Transurban and our partners have invested in Sydney's road network. These reforms include the government making the $60 a week toll cap permanent from 1 July this year, efficiently providing support to car-reliant areas like Western Sydney.

We've also indicated a willingness to remove administration fees for toll notices in New South Wales by mid-2026 as part of a comprehensive overhaul of the enforcement process, making payments simpler for motorists and the compliance process more effective. This has been a collaborative and constructive process throughout with the New South Wales government respecting the value of existing contracts. Working to the government's timetable, we expect the process to be finalized by the middle of the year.

It was a really exciting moment to open the West Gate Tunnel in December. From inception, the vision was clear: to deliver benefits for Melbourne that extended well beyond the tunnel itself. That means improving freight connections, taking trucks off local roads, returning neighborhood streets to the people who live there and opening up new capacity for Melbourne's West. That experience has been felt from day 1, not just on the West Gate Tunnel, but across the broader road network. It was good to open at a quieter time of year and initial traffic volumes are largely as expected given the early stage of ramp-up.

Based on historic trends we've seen on our other assets, new roads can take 18 to 24 months to ramp up. And with populations projected to boom in Melbourne's West, we've built the West Gate Tunnel to benefit the city for the next 50 to 100 years, the same way CityLink still benefits Melbourne drivers today. The West Gate Tunnel is 1 of 3 major projects to open in FY '26. In Northern Virginia, the new 495 Northern extension has also opened very well with good customer uptake. The new lanes are already improving travel times through one of the most heavily congested parts of the Washington, D.C. metro area.

And in Sydney, our M7-M12 integration project is nearing completion, on track to start opening to traffic from next month. Together with the West Gate Tunnel, these new projects are delivering 144 kilometers of new lane capacity, bringing relief to fast-growing communities.

Our North American business is continuing to have an outsized positive impact with a step change in the top line. To put things in perspective, it contributed around the same amount of free cash this half as it did for all of FY '23. Our investment in new assets like the Fredericksburg extension, the Opitz Boulevard ramp and the 495 Northern Extension has opened up more capacity and cut travel times in the region. Drivers are clearly seeing value in time savings and reliability. And with that, we're seeing traffic grow even outside of peak periods. We've also taken an active approach to our pricing to better reflect the strong demand for our assets and value proposition. This has bolstered our underlying earnings, which is real value, especially when you consider the longevity of our North American concessions.

We take a long-term view on growth, firmly focused on value creation for our customers, our communities and investors. It's about opportunities in the right places at the right time and on the right terms to deliver long-term value. Enhancements and new connections in our existing markets continue to be an important part of our value proposition, building on our global experience and continuing to deepen our understanding of customers' needs. There's a growing suite of possible enhancements to our existing networks, particularly in North America and Queensland. And in Victoria and New South Wales, we're positioning for medium-term opportunities that we anticipate will come in time as we continue to focus on our customers.

More broadly, we are exploring new strategic markets with optionality for the future, working with new partners for the right risk and return trade-off today, creating new options for decades to come. For example, we're assessing Atlanta and Nashville and engaging in market sounding processes with the New Zealand government who are keen to build new roads and are taking a modern approach to road user charging. We're also looking at further road user charging trials in Australia, where these reforms will play an important role in driving productivity.

The work we've done over the last 2 years, along with the quality and longevity of our portfolio allows us to approach new growth opportunities in a fresh and disciplined way, starting with the needs of our customers. I say this because our right to grow starts with our 11.3 million customers. Our customers' experience is twofold. It's both physical on our assets and digital. That's why we're investing in new features like transparency tools that bring to life the value customers get from using our roads. This includes personalized travel time savings in the Linked app, allowing customers to quickly see the value of their choices. This dual focus on infrastructure and technology for our customers is an important differentiator, making us a go-to partner and positioning us to take advantage of future mobility trends.

Let me now pass to Henry to take you through some more details on the results, and then we'll come back and go to questions.

Thanks, Michelle, and good morning, everyone. We've set out our statutory results on Slide 14, but I'll move to the next slide where we've set out our proportional results. Michelle has outlined a number of key areas where we've laid the foundations for growth, and this includes ensuring that we're continuing to run the business efficiently. Proportional toll revenue grew 6.4% to almost $2 billion, and that was supported by good underlying traffic and new capacity coming online from recent investments, as Michelle outlined.

Proportional operating costs increased during the period to $474 million, which is a 4.6% increase on the first half of FY '25. That's a low base of comparison as the costs in that prior comparable period were down 3%. And it's important to call out that we expect full year cost growth to remain below inflation, excluding the new asset costs. In fact, when you compare first half of FY '26 costs to the cost base 2 years earlier in the first half of FY '24, total costs rose only 1.5%. We show this on the cost slide that we'll come to in a minute.

This cost position contributed to proportional operating EBITDA growth of 6.4% and a margin improvement of 30 basis points. Free cash increased 2.4% for the period, which reflects the fact that we brought some financing costs from the second half into this half as part of our refinancing activities. We anticipate that the impact of this timing will normalize in the second half, which supports the free cash position underpinning the 6.2% growth in distributions we're guiding to for FY '26. You'll see we've continued to show proportional operating EBITDA this half, which focuses on the performance of the business and excludes a favorable $47 million third-party settlement in connection with finalizing some construction projects we've undertaken in Queensland.

Looking at our funding position and the performance of our debt book, we're very pleased with how the half year concluded. Our weighted average cost of Australian dollar debt rose 9 basis points to 4.6%, while we were able to extend the maturity profile of the debt book marginally to 6.9 years on a weighted average basis. As at December 2025, our debt book was 88.6% hedged, which was slightly lower than the 92.5% hedging position at June 2025, and that reflects a modest increase in floating rate exposure that we intend to progressively hedge.

Looking ahead, despite the higher interest rate environment, we're only expecting marginal increases in the cost of funding given the staggered maturity profile where no more than 10% of the debt book matures in any given year. I'll provide more detail on our liquidity position shortly, but the headline is that it remains strong with $3 billion in corporate liquidity and additional balance sheet capacity available to support the opportunity pipeline that Michelle just outlined.

Slide 16 presents the free cash bridge showing a 2.4% increase, as I said a moment ago. And this growth has been affected by the timing of some finance costs that we brought forward that will normalize in the second half. Free cash in FY '25 was also weighted to the first half with the distribution in the prior comparable period 107% covered by free cash, which is also driving the lower headline growth number this half. So we expect this will normalize in the second half to support the distribution guidance of $0.69 for the full year, comfortably within our cash coverage range of 95% to 105%.

While the weighted average cost of debt rose marginally half-on-half, underlying finance costs, excluding those costs brought forward, increased $11 million. And that will increase in the second half with a reduction in interest capitalization since the opening of West Gate Tunnel, although free cash impact of West Gate is expected to be neutral this year. Interest income also declined slightly, reflecting lower average cash balances over the period. And in addition, tax paid increased modestly across parts of the group.

Turning to the proportional results on Slide 17. Our half-on-half operating EBITDA growth was underpinned by the strong performance from our Transurban Chesapeake business in Virginia, which we've called out for a number of halves now. Combined with the ongoing cost control across the group, our EBITDA operating margin continued to expand by an additional 30 basis points.

Looking at costs in more detail, you can see the continued stability of proportional operating costs across multiple periods on Slide 18. Costs increased 4.6% this half. But as I've mentioned earlier and Michelle has mentioned, that really reflects the fact that the first half of FY '25 was low due to the timing of maintenance costs last year. And as I said earlier, when you look back over 2 years, you can see that we're only 1.5% above the first half of FY '24 number.

Maintenance is an area that we're continuing to see some cost escalation in the coming years as several assets move into their next major maintenance cycle, and that includes WestConnex, which is entering its first major cycle. That's something we're focused on, and we continue to identify meaningful opportunities to enhance our maintenance program and refine our asset life cycle models. With the new enterprise operating model now in place, we're better equipped, we think, to manage maintenance costs, helping to drive efficiencies and support long-term portfolio optimization. Road operating costs were also up for the half, which relates to escalation in large incident response and maintenance contracts that we have in place as well as the tolling expenses associated with things like toll notice costs. Both of those are areas where we see opportunities to contain the cost growth going forward.

I think importantly, we still see opportunities for further efficiency across our cost base, and we expect FY '26 cost growth to remain below inflation for the year, excluding new assets. As we've said previously, that's also subject to the level of development activity, which can vary with the opportunity set in front of us.

Turning to our balance sheet and funding summary. After accounting for the committed project spend and distributions, our corporate liquidity is $3 billion with a further $2.5 billion of balance sheet capacity that positions us well to support further growth. As you can see on the right-hand side of the slide, our treasury team have completed our FY '26 funding task and through a liability management exercise undertaken in December last year, we've progressed the funding task for FY '27, '28 and '30. And finally, despite periods of volatility in debt capital markets, we continue to achieve strong outcomes in our funding activity, and this demonstrates the depth of our financing relationships and the strength of our balance sheet and credit profile.

If I turn to Slide 20, you can see how we're well positioned in the current macroeconomic environment. Despite ongoing volatility in the interest rates and inflation globally, our portfolio structure continues to provide strong insulation and predictability. Over the past 6 years, our weighted average cost of debt has increased by only 30 basis points despite significant market volatility, which we've shown here. In that same time, we've had consistent access to liquidity, refinancing $45 billion in debt, and this reflects consistency and execution of our refinancing strategy and disciplined management of the debt book. Just under 90% of our proportional drawn debt is hedged, substantially limiting exposure to short-term rate movements.

Our 6.9-year weighted average tenor and staggered maturity profile avoids concentrated refinancing risk, giving us flexibility to approach refinancing strategically rather than reactively. Importantly, over 90% of our revenue base benefits from contracted CPI-linked or fixed pricing escalation, which helps provide a natural hedge at the top line, and we've shown that here. This helps offset the impacts of inflation on our cost base and supports earnings growth through the cycle. So when you bring this together, our hedging program, debt maturity profile and inflation-linked escalators, we're well positioned for a higher inflation environment.

Slide 21 highlights our capital allocation framework, an approach we've used consistently and one that continues to guide disciplined value-accretive decision-making. It provides a clear view of how we manage the portfolio to deliver reliable distribution growth while creating the balance sheet capacity to reinvest for the future. In the first half of FY '26, we delivered 6.3% growth in distributions per security, supported by 6.4% operating EBITDA growth, demonstrating the strength of our model and the momentum across the portfolio.

We invested $300 million in CapEx during the period with a similar level expected in the second half, ensuring that we continue to deliver key projects. And our balance sheet remains in a strong position to support further opportunities, and we continue to actively assess potential investments, both within our existing portfolio and in new markets where we see long-term value.

So stepping back, we're very pleased with the business performance this half marked by good traffic volumes, disciplined cost management and continued margin expansion. This provides the foundation for further growth opportunities. From a funding perspective, our position remains robust. We're well placed to pursue new opportunities, both within the core business and in new markets where we see further potential to create security holder value.

I'll now hand back to Michelle for closing remarks.

Thanks, Henry. So we're entering Transurban's 30th year in a strong position. We simplified, reset critical relationships, continue to deliver our major projects, generated more value from the assets we have and enhanced the customer experience. We've done all of this with future growth in mind. I'd like to thank the Transurban team for their contributions this half. We're excited to continue to build on this momentum in the years ahead.

And I'll now pass back to Craig and go to questions.

[Operator Instructions] The first question today comes from Andre Fromyhr from UBS.

Firstly, I just wanted to ask about West Gate Tunnel. Obviously, the contribution today in the pack is very small based on only opening very recently. But are we right in understanding that by saying it will be free cash flow neutral this year, covering $180 million of financing costs over the year that, that implies roughly $90 million of EBITDA in the second half. Is that what's sort of baked into the business case? And from what you've seen so far, is it consistent with that case?

So I'll take the high level, which is, yes, so far consistent with business case, and I'll get Henry to confirm the numbers.

Yes. And so in broad terms, we have guided to that $180 million of capitalizing interest that's going to start to hit the P&L, and you'll see that in the back of the pack. It's not a straight line in terms of how that then falls through this year. So yes, we do expect it to be broadly neutral. You will still see a little bit of residual capitalizing interest come through in the second half. There's still a little bit of spend on that project, which is wrapped up in the kind of residual CapEx that we'll spend this half. So I wouldn't guide to a number as high as where you're landing to, but obviously, we're not putting specific guidance out on this, Andre.

Right. No, that's helpful to understand that it's not just switching on the whole amount straight away. Maybe more broadly around the domestic traffic outlook. Is it reasonable -- I mean we're seeing reasonable ADT across all 3 markets, but we're still in a period of disruption, at least historically from West Gate Tunnel impacting Melbourne and then M7, M12 in Sydney, Warringah Freeway in Sydney. So can you help us understand what the profile of traffic would look like as you start to see those projects completed? Is it sort of an above average outlook to see the recovery from those projects?

Yes. So maybe I'll start and then Henry can sort of go a bit more into the precise details. So I think the momentum across all markets was good, particularly as we're coming through the second quarter because in the first quarter, we had some rain in Sydney, which was about 1% in terms of its overall impact.

From a construction perspective, yes, Melbourne has really abated now. Clearly, with West Gate opened that happened really late in the half. And the underlying trend in Melbourne was pretty good, port traffic, airport traffic. So that's performed well. In Sydney, construction impacts have started to abate and will do so over the course of the year. So the M7 will open -- be fully opened by June. But -- so that -- those impacts will go away. And I think in the past, we spoke about that having about a 5% impact on the M7.

And then some of the government projects will continue to abate over time. But I think we'll be at the peak of those impacts starting to ease into the second half. And then North America, we did have a government shutdown, but the momentum outside of that was really, really strong. And Brisbane sort of continued its normal trajectory.

I don't know, Henry, if you want to add to that.

Yes. Maybe the only thing I'd add is Melbourne has, we think, reached a bit of a turning point. So we were quite buoyed by the numbers we saw this half. We saw growth across all categories Southern Link, Western Link both grew well. Typically, it's been a little more weighted to the toll trips, and we've seen a little bit more balancing on the network, which is a positive. Large vehicle volumes were up nearly 5%. Weekends are still growing strongly. So we're seeing that good discretionary sort of growth. So it was about 3.5% growth on weekend and public holiday traffic.

I frame that picture just to say there is, we think, something happening in Melbourne and the addition of West Gate Tunnel to the network has been a real positive. So that's a watch point. And then I think Michelle has outlined well just the expectations around the dissipation of disruption in New South Wales, which is the other big watch point.

So it feels sort of -- we've had a couple of years, 2, 3 years of quite a lot of construction going on, particularly in Melbourne and Sydney, and we're coming out of that now, which is -- we're seeing the momentum of that.

If you don't mind me asking one more, specifically on the U.S., you called out the strength of the existing assets and the opening of NEXT. But there's also a couple of dot points around potential new market opportunities. Am I right in understanding that's part of the partnership with Ferrovial? And is there anything more detail you can share about the nature of that agreement on those projects?

Yes. So in terms of North America, we've got a whole lot of opportunity still in Virginia. I think we're well engaged on the bidirectional. There's other opportunities that are starting to emerge there, and we do those with our existing partners in Transurban Chesapeake. We're exploring a couple of other markets, as you say, Andre, with Ferrovial. Those processes are underway. So there's not much more we can say about them. There will be more to say later in the year on those. But -- so those are processes that are underway that we're currently assessing.

The next question comes from Owen Birrell from RBC.

Just a quick question just on margins for Melbourne and Brisbane. Melbourne margins were up to about 88%. Just asking what the primary driver of that was and whether it's sustainable in the context of West Gate Tunnel opening. And secondly, a similar question on the Queensland margins up to about 79%. And what was -- was that like a volume or cost control or one-offs?

Thanks, Owen. So again, I'll just sort of make a high-level remark, and I'll get Henry to go through it. Very much our overall approach has been to deliver more value from the assets we have. And you've seen sort of continual margin expansion being a core part of what we've been doing. We've been doing that by investing more into the road itself. So for example, resheeting of the M2 in Sydney, et cetera, and reinvesting in our customers and then looking for opportunities for efficiency everywhere, as Henry has outlined.

So I'll get Henry to comment on sort of Melbourne and Brisbane specifically, but it is a core part of what we've been focused on.

Yes, it is. And if you look, we obviously provide the maintenance spend numbers. Melbourne is a little bit down. So that just reflects some of the timing around some resurfacing works, I think, there. And so we have -- we would expect that to probably unwind a little bit, which goes to your question around sustainability of the pace of the improvement there, Owen. I wouldn't necessarily say that, that won't unwind a little bit. Brisbane, probably a little more sustainable in terms of that is a part of our business that is just performing well and is very resilient in terms of volumes.

The broader observation is also that if you remember, we went through a major restructuring in the business last year. We have moved a little bit of resource into the center operating under the enterprise model, and it goes a little bit to then the allocations as well and how they've run this half. So there's a little bit of that playing out in some of those numbers, too.

Yes. And not to labor the point we sort of made through the presentation, but we run the business on a yearly basis rather than a 6-monthly basis. So there's a little bit coming through the 6-month sort of half-on-half comparisons. But if you compare to the second half of last year, you can actually see the costs coming down, and that's the hard work we did, particularly with the organizational changes we made last year.

The next question comes from Rob Koh from Morgan Stanley.

So apologies if this has been covered, I had to dial in late to your call. Just a couple of items in the proportional EBITDA. I noticed the M7 paid a little bit more tax this year. I'm just wondering if there's any background on that. And then also, there's a nonoperating item, which is a positive in your Transurban Queensland result. Just wondering to the extent you can, what color you can provide on that, please?

Thanks, Rob. And I'll get Henry to cover both of those.

So the NorthWest Roads Group, which the M7 is a part of, has moved into a taxpaying profile. So it's through -- it's utilized its tax losses. So you are going to see a progressive ramp on the tax payment in that group, and that reflects what we saw last period and this period. So that is a trend line that will continue.

And then the second question just relating to the one-off item just relates to the settlement of a matter around one of the projects that we had in Queensland. We can't talk in detail to it just because it was tied up with some confidentiality, but it was a positive in terms of a receipt that we had as a result of that, which was an improvement to the result, but we didn't think it was appropriate to take through. So we made the adjustment to the operating EBITDA.

Yes. And so that's not part of your free cash on that basis.

Yes. through some amounts we will spend in the future. So net-net, it will sort of wash through.

Yes, yes. No, that makes sense. All right. Just a question on your North American results. So that's in Virginia performing very strongly. I guess, average tolls increasing in quite good terms. Just wondering if that's kind of consistent with your understanding with VDOT because I guess there is such a thing as charging too much on these things, isn't that?

Yes. So we've very much followed the value our customers see in that, Rob. The way I'd explain it is over the last couple of years, we've added quite a bit of new capacity and FredEx being a really good example, where if you use FredEx, you can save an hour on a daily commute. So it's a very significant time saving. for people. And what we've seen on the back of that is motorists valuing not just the time savings, but the reliability of the roads. And therefore, traffic has remained really strong even in off-peak periods. And so our pricing has been adjusted with that in mind, of course, very conscious of our broader standing, but it really is following the value our customers see.

Yes. Okay. Sounds good. Final question for me. Have you -- is there any update you can give us on a potential cost claim at the West Gate Tunnel?

So no, as we've said, one, it's brilliant to have the road open. I mean that's a big deal to get it open. As we've said, there could be claims that come at the end of a project. If they do, we'll assess them in the ordinary course. Claims don't necessarily mean liability. If they come, we'll assess them in the ordinary course.

The next question comes from Adam West from JPMorgan.

I'm just wondering, I'm not sure if you could provide any color around this, but just on the I-285 opportunity, I guess we've heard that the East Peach Partners did quite aggressively on the adjacent S400. I'm just wondering if you're factoring, I guess, aggressive bidders into that and whether or not it'd just be focused on the 285 or you guys would be considering other opportunities in that Georgia region.

So it's too early to comment on approach, and it's something we can talk about later. Clearly, discipline is really important to us and everything we assess is with long-term value creation in mind, and we'll do that work thoroughly and thoughtfully as you'd expect of us. Both Atlanta and Nashville have longer-term growth options in them beyond the current processes that are running, and that's part -- again, part of what's being factored in. But for us, it's not about growth for growth's sake. It is about discipline. It is about long-term value creation, and we'll -- we take that very seriously, and we'll assess those bids in the fullness of time.

Great. I guess my second question would just be on the Maryland and American Legion Bridge. If you could just provide any color around timing or size of that opportunity?

Yes. It's a little early days. I mean, so with our Northern Extension project opening, that really leads right up to the American Legion Bridge. So that's, in a sense, highlighting the need to improve the capacity on the bridge, which is quite congested today. There has been a recent call for expressions of interest to which us and others put in an expression. Timing is not clear at this stage, but it is now on the agenda, which we knew it would be at some time, and it's now sort of coming on the agenda.

Great. That's clear. I guess final one for me is just probably on the M6 in Sydney Stage 1. I guess, do you have any early indications on what the traffic impact would be on the MA and WestConnex when that opens?

I'm just looking at Henry on that if we've disclosed anything along those lines.

We haven't made any specific disclosures. I think there was an expectation that it would have a marginal benefit to the WestConnex, but it was a little further out.

Yes. It was always a bit further out, and it was relatively small in the context of WestConnex. What's been really good on WestConnex is post gateway opening, we're certainly seeing the benefits of that coming through. And then the Western Harbour Tunnel will open in the next little while as well.

[Operator Instructions] The next question comes from Ian Myles from Macquarie.

Just on the U.S. still, can you maybe give some talk on what you see the long-run price growth might be around the hot lanes -- because we're seeing a fair bit of discussion people starting to reconsider that CPI plus or a nominal GDP for the road is the right sort of assumption?

Yes. I think -- thanks, Ian. I think long term, sort of normal growth rates is the way to think about it. What we've done, I think, is take an opportunity to step change the base, if you like, by getting -- and as I answered in response to Rob's question, customers have seen the value, so we've step changed. The managed lanes, particularly around Virginia where we are, the acceptance of those and the value customers see has grown over time, and that's what's driven the price increase, and we continue to look for ways to optimize that in the future. But yes, I think you're sort of in the right ballpark in terms of thinking about it long term.

Okay. Can I refine that then? The step change, has the step been enough or we got further steps to go before you reach than the GDP -- normal GDP number?

My sense is there's still a bit more to do. But sort of going back to Rob's question, we want to make sure whatever we do, we do in the right way and at the right time. So we do it to follow value. So as there are opportunities to do that, and we see the elasticity and we see how roads are performing, particularly outside of congested periods, we'll take those opportunities. So I think there's a bit more would be my sense.

Okay. In the [ Simmone Harold ], there sort of the discovery of the state's communications, they sort of implied M2 might be required to get some compensation. I'm just sort of intrigued, is there any claims you might have against government for terms like ED would obviously have a claim on bidirectional. Are there any other claims you may have?

So I'm not going to comment on -- because we're in the middle of a confidential process. Maybe in a macro sense, what I would say is the way toll reform has been approached is that the value of contracts is being respected and upheld. And as we look at all sorts of options and the government is considering options, there would be ups and downs in those that would be -- some roads could have compensation, some could go the other way. So we're working through all of that, but it's through the lens of value being upheld.

And that lens of value is the yield from those roads is collectively going to be unchanged.

So it's both value, NPV, real value. And also, we've been really clear that the timing of cash flows is important, and that's been a big part of how we've been looking at it as well.

That's good. And just what's actually left to spend in the current pipeline? Is it just some residual spend on the M7?

No, Ian, I'll take that. There's a little bit more. So we pointed to about $300 million of residual CapEx. It's split roughly half still remaining on West Gate. There is still a little bit to do around the margins of West Gate, which is typical of a project of that size. And then the residual -- the majority of the residual is with the M7-M12, about $120-odd million. And then there's a little bit on NEXT as well, much in the residual amounts NEXT, which is akin to the kind of work we're doing on West Gate just to close the project out post opening.

Okay. Henry, because you're responding, it's a good segue to the balance sheet. How much capacity is now sort of sitting in the balance sheet? And I guess you've got this trade-off of do you start becoming more aggressive in capital management over containing or retaining money for future growth. I'm sort of trying to understand how long before you go before you pull that those decisions or have to make those decisions.

Henry, why don't you answer the financial part of it, and I can give -- add a bit to it as well.

Yes, sure. So just to clarify your question is, are we -- at what point do we consider capital management as a deployment for balance sheet capacity?

Yes. Just because you're building -- I think you'd say you should be at circa 10x net debt to EBITDA and you're building capacity every year.

Yes. No. And so maybe the first point is we're not at that point presently because we do see the pipeline of opportunities in front of us. And that's a combination of what Michelle described earlier, the enhancement projects on the existing networks and the new project opportunities in new markets that we're also looking at. Those, we think, actually match quite nicely against the balance sheet capacity that we see, not just currently, but emerging as we look out over the remainder of this decade and into the next because the funding profile of those projects will extend into the early 2030s.

In absolute numbers at the moment, as it stands here today, we see circa $2.5 billion of capacity that we could access fairly comfortably and stay within the credit risk profile we are. And that's obviously one of the key parameters we sort of measure our capacity by. And then as we dimension the kind of incremental available capacity as we look out over that time frame I described, you're right. It's still consistent with that rule of thumb that we've given previously of for every $100 million of EBITDA circa 700 -- of additional EBITDA, I should say, circa $750 million to $1 billion of debt capacity should emerge.

One of the things just to think about in the context is we are about to have a significant amount of sort of debt that you might associate with West Gate Tunnel that is about to start to move from accreting interest or capitalizing interest into P&L. So that should be treated almost in a way as absorbing some of that capacity as well.

And maybe just -- sorry, Ian, I was just going to add just from a philosophical perspective, my view is it's not our money, it's our owners' money. And so question one is, do you have value creative, value-accretive opportunity within the business to spend that money. We still think there is. If that doesn't turn out to be the case for whatever reason or it takes a lot longer, of course, we'll look at capital management.

Okay. In the presentation, maybe I misread it, but you mentioned the U.S. assets are moving to tax paid or starting to pay tax. I was just sort of wanting to understand that profiling and what might occur?

No. It's -- the U.S. assets are still in a -- so at the margins, I think there was some minor tax movements. But if you just go -- I'm trying to find the slide in the back of the pack.

If it's minor, that's fine.

It's minor. Slide 55 just gives you a sense. We're really looking towards the end of this decade where they may start to tax payment profile.

And the other one is, I was curious to understand why is the U.S. cost of financing jumped by 30 basis points given a very long-dated debt?

Yes. We have been out in the market. So we've done some 144A funding late last year. And even though it was well received and well priced in the current market, when we go into the market presently, when you think about our weighted average cost of funding being somewhere in the mid-4s and when you get into the market and hedge for interest rates and currency, which we will always hedge for currency. And then at the moment, there's a bit of a judgment call on how much we're hedging for interest rates, just given where we're at in the rate cycle, but you typically will have a 6 handle on it. So you're talking about 150 basis points to 200 basis point premium.

Okay. So that U.S. dollar debt when you say average cost not just looking at the U.S. dollar-denominated amounts, which are unhedged.

Sorry, I missed that say that again.

So when you weighted average cost of U.S. dollar debt, that's including hedged amounts as well as unhedged amounts.

Yes. Yes. That's right. We have -- we did leave some of the U.S. dollar debt unhedged for currency if it has a natural match to the U.S. funding requirements. So that sometimes will play around with the exact hedging profile.

The next question comes from Nathan Lead from Morgans.

Just 3 questions, if you don't mind. So first, West Gate Tunnel project, look, I realize it's really early days. But if we go to the back of the pack where it's got the traffic data, sort of talking about half of the traffic coming from heavy vehicles. Could you just give us a sense about where you guys think the traffic mix will sort of go to at a steady state?

Nathan, in terms of West Gate Tunnel, yes, a big part of the design was actually to get trucks off local streets and off the bridge. So that is a big reason for the project. It started exceptionally strongly with trucks and on expectations across the board. Over time, that mix will shift a bit. And I think the answer is in the tunnel itself, about 20% of its heavy vehicle traffic right now. And we're taking -- yes, so -- but that mix will shift a little bit over time as it ramps up and smaller vehicles get used to the new infrastructure.

Yes. Okay. Second question is, and I suppose a bit of a follow-on from Ian's question about capital management. But if you look back over the last 4 years with the DRP running, I think you raised something like $600 million in capital. It's about $150 million in the last 12 months. Balance sheet is strong, post CapEx hump. Why not consider neutralizing the DRP, if not turning it off instead of diluting shares on issue?

Yes, it is something under active consideration, Nathan. Yes. Just given our triple staple, there's a little bit of complexity from a timing perspective for when we announce dividends and how the DRP operates, but it is something under active consideration.

Okay. So you don't need it to continue to keep on adding equity into the capital structure to set you up for the growth spend down the track?

No. I think neutralizing it, depending on all sorts of factors at any one point in time is something that arguably makes some sense, but we've just got -- there's a bit you have to work through on that.

Okay. And then final question for me. You made a guidance once again about you wanting to bring your cost of your existing business, the growth of it being below CPI. What should we expect about the new assets? What are they going to add in? You've given a steer on that before. I just wanted to get an update on it.

Yes. So we previously said think about those as a sort of 3% to 4% sort of increment on the cost base. So that would take the sort of headline cost growth to kind of mid-single digit in terms of where it will land post those new assets. And when we say new asset, it's really mainly West Gate Tunnel. As we all know, there's a little bit of Northern extension cost, but it's not a lot in the mix.

Yes. And so that's just growth just for FY '26, right? So we've got to annualize the impact of those new assets, the costs of it.

Yes, that's right.

And then even with new assets into the future, we'll continue to look at ways to get efficiency across the board as they become part of the overall portfolio.

There are no further questions at this time. I'll hand the conference back to Michelle for any closing remarks.

Thanks, everyone. As Craig said at the start, we know it's a really busy day for all of you, but the IR team is available and will be available through the day if you need anything. So thanks, everyone.

Good morning, everyone. My name is Craig Drummond, and I'm Chair of the Transurban Group. Welcome to the 2025 Annual General Meetings. This morning, we are holding 3 meetings concurrently. These are the Annual General Meetings for Transurban Holdings Limited, Transurban International Limited and Transurban Holding Trust.

We have a quorum, so I declare the meetings open. I'm chairing today's meetings in Melbourne, and on behalf of Transurban, we acknowledge the traditional owners of the lands throughout Australia, and we pay our respect to elders past and present. We acknowledge our roads and infrastructure are built on country and with deep respect we incorporate the voices of First Nation's people in our approach, supporting access to mobility across communities.

An example of how we do this is through our First Nation's driver programs delivered by the KARI Foundation in Sydney and the [ Art ] Academy in Brisbane. In FY '25, these programs helped over 60 students gain their driver's license. The Board and I are pleased to be meeting with security holders in person and online today as well as providing our security holders with an update on our opportunity for Board members to hear directly from security holders.

For those joining us online, we have worked diligently to ensure that 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 the notice of meeting, security holders will have an opportunity to vote and ask questions of the Board in real time.

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. With your consent, I will take that document as read.

I'd now like to introduce the directors and our company secretary. On my right are our company's Secretary, Fiona Last, our Chief Executive Officer, Michelle Jablko, and independent nonexecutive directors, Gary Lennon, Patricia Cross, Rob Whitfield, Marina Go, Mark Birrell, Sarah Ryan and Tim Reed. Marina Go and Sarah Ryan are standing for reelection. You'll hear from them both later in the meeting.

As part of the Board's active succession activities, we recently announced the appointment of Michael Wright as a Non-Executive Director. Michael will join the Board at the start of November and it is intended that he will stand for election at next year's AGM. I'd also like to acknowledge Peter Scott, who unfortunately is unable to be here today due to a medical condition. As previously announced, Peter will be retiring from the Board at the conclusion of today's meetings. Peter was appointed to the Board in March 2016 and has been an invaluable contributor during a period of growth and success for Transurban.

On behalf of your Board, to Peter, thank you for what has been truly a significant contribution and great service to our company. This year saw us deliver real and sustainable value to all of our stakeholders through new initiatives and continuous improvement both on and off the road. At its core, our customer value proposition is simple. We strive to deliver safer, faster and easier journeys, saving our customers time fuel and carbon emissions every day. With this in mind, we set out with a clear goal to communicate our value proposition to our more than 11 million customers. We wanted our customers to see and feel the value they receive when choosing our roads. This included launching a new travel time savings feature in the Linked app. And partnering with breakfast radio to give peak hour motorist real-time traffic reports, helping customers to make informed travel decisions.

We continue to invest in digital upgrades across our app and website to further improve the end-to-end customer experience. As part of these efforts, we introduced a customer service chatbot, which uses generative AI to respond to customers within the linked app and website. The technology is handled around 420,000 customer inquiries since it launched with most customers rating the experience is helpful. Cyber security measures were also enhanced with new generative AI-powered fraud detection technology, helping us to identify fake customer accounts faster. Together, these efforts are building trust and loyalty from our customers, and we are pleased to have achieved a Net Promoter Score of positive 12 up from negative 2 just 5 years ago. We saw resilient traffic growth across all markets in FY '25. There was underlying growth in Sydney and Brisbane over the year with traffic up 2.7% and 1.5%, respectively.

In Melbourne, traffic grew by 1.2% in FY '25 and helped by increased airport trips and weekend traffic. North America was a standout performer this year, contributing nearly 25% of overall revenue growth despite representing only around 7% of total trips. Drivers are consistently choosing our express lanes even outside of peak house, and our pricing reflects that value. We're also looking forward to the 495 Express Lanes Northern Extension project opening in the region later this year. Today, we released our September quarter traffic results with average daily traffic increasing by 2.7% on the same period last year, averaging 2.6 million trips per day. The result was supported by growth across all markets, with North America continuing to perform particularly well, up 6.8% for the quarter.

In Melbourne, traffic growth was supported by increased airport trips on Western Link and easing construction impacts across the network. And we saw continued growth in Sydney and Brisbane with both workday and weekend trips increasing. The result demonstrates the value customers place on our roads and the quality and diversity of our portfolio.

Let me now turn to our key financial results for the year ended June 2025. Proportional toll revenue grew 5.6% to $3.7 billion, supported by resilient underlying traffic. And proportional operating EBITDA grew by 7.4%, with a margin improvement of 140 basis points. Our continued focus on managing costs as well as maximizing the performance and efficiency of our operations, saw proportional operating costs hold flat year-on-year at $947 million. We have used proportional operating EBITDA this financial year to highlight the performance of the business, excluding the one-off impacts of both the Connect East litigation of $143 million and restructuring costs of $29 million. Free cash, excluding capital releases, increased by 7.6% to more than $2 billion. This allowed us to deliver more than $2 billion in gross distributions to securityholders.

Our full year distribution of $0.65 per stapled security, which was in line with guidance was 99.5% covered by free cash and represented a 4.8% increase on FY '24. Despite some volatility in debt capital markets throughout FY '25, we were able to consistently secure strong outcomes when accessing debt markets. We raised $3.8 billion of debt across bank and debt capital markets to support funding initiatives and project delivery. Our weighted average cost of Australian dollar debt remained flat year-on-year at 4.5%. This was mainly due to some well-timed hedging of some of our floating rate exposure that we carried over the financial year-end. Weighted average maturity for group debt is marginally lower than the prior year at a comfortable 6.6 years.

In September, we returned to the U.S. public debt market, where we successfully priced a USD 550 million bond at attractive rates with strong demand for our paper. So our balance sheet remains in a strong position, and we are well funded to take advantage of future organic growth opportunities with balance sheet capacity in excess of $1.7 billion. Each year, we conduct a listening survey to understand the expectations of the community. This year, our community engagement survey heard from more than 5,000 Australians giving us valuable insight into what matters most and where we can have the greatest impact.

Safety was again rated the most important focus area and expectations continue to rise around our road safety initiatives. These initiatives center on road safety for all ages and stages from babies and car seats to teens getting their learners permit to older drivers. We hit a milestone of 10,000 free car seats checked through our partnership with Kids Safe, which operates in Brisbane, Sydney and Melbourne. We also conducted free car seat checks in Virginia and Montreal. Our roads continue to perform well against relevant Australian and international safety standards. All of our Australian and U.S. rates have been assessed by the International Road assessment program. with North Connects becoming our first asset to earn a 5-star rating safety rating. And Monish University's Accident Research Center's latest analysis has again found that our Australian roads are, on average, at least twice as safe compared to like roads, such as freeways or motorways with similar traffic volumes.

We continue to work towards our goal of net 0 emissions by 2050, achieving a 24% year-on-year reduction in Scope 1 and 2 emissions. And we're working closely with our suppliers and delivery partners to reduce Scope 3 emissions across our supply chain. We also remain focused on supporting the demands of our growing cities and helping prepare our customers for the future. This year, that included showcasing electric vehicles at our EV Drive Day in Sydney, giving the community a chance to test drive and EV and learn about cost-friendly ways to own and charge them.

As we usher in Transurban's 30th year, we look forward to a new era of growth. Transurban was listed on the ASX in 1996 and the strong macro trends that enabled our business then, population growth, freight growth and increasing urban congestion remains strong today. In the next year, we'll open 3 major projects. And beyond that, we're actively exploring another $10 billion pipeline of potential opportunities. Michelle will share more about our projects and the opportunities ahead.

Before I conclude, I'd like to recognize Michelle and the broader executive team for their hard work this year and the way they have guided the business through significant change. And on behalf of the Board, I'd like to thank you, our securityholders for your support of Transurban. As populations grow and demand for our roads continues to rise, our quality assets offer stable opportunities for investment and growth -- sorry, the offer opportunities for investment and growth.

Looking ahead to FY '26, we're excited about the project milestones on the horizon as well as the pipeline of opportunities being evaluated. These opportunities will continue to drive long-term value and distributions for you, our security holders. With this in mind and on the back of good traffic results today for the September quarter, the Board today reaffirms our FY '26 distribution guidance. We expect the FY '26 distribution to be $0.69 per security, representing 6.2% growth on FY '25 with expected free cash coverage of 95% to 105%. On that note, we have a short video of key highlights for the year.

[Presentation]

Thanks, Craig, and good morning. Every day, customers take more than 2.5 million trips on our roads. And as populations grow, the need for high-quality infrastructure is clear. The opportunity for growth is real. How we realize it will come from bringing exceptional value to customers and from the results we deliver for our investors. That's why we've been focused on bringing together our physical and digital infrastructure to deepen the customer experience and get even more value out of our infrastructure.

By delivering tangible value and unlocking efficiencies, we're strengthening stakeholder support and driving sustainable returns for you, our security holders. Our roads are more than infrastructure. They underpin the livability of our cities and connect people to jobs, recreation and each other. By relieving the burden of upfront spending, we enable government budgets to be directed to other critical areas and still deliver broader community benefits like reduced congestion, improve safety and better connectivity.

Taking New South Wales, where Transurban and our partners have invested over $36 billion in the state since 2005. This is equivalent to building over 51 hospitals or 1,300 schools. For individuals, our road and people choice, helping our 11.3 million customers get to where they need to go faster, safer and with less fuel. And by bringing together our physical and digital assets, we're helping our customers have the digital tools that help them make that choice and connect them to the value they get from using our roads.

The new travel time savings feature in the Linked app is a great example. It lets customers quickly see the money spent versus time saved, putting the choice in their hands. In August, for example, linked customers collectively saved an estimated 5.9 million hours by traveling on Transurban roads. And our Linked Rewards program continues to expand with new partners coming on board this year, including our new fuel discount partner, 7-Eleven. Our focus on customer value extends to other priority areas for the business, including reaching a positive outcome on toll reform in New South Wales. We're continuing to work constructively with government to deliver solutions that meet their priorities and a positive for Sydney, while protecting the significant investment that Transurban and our partners have made in Sydney's road network. And we're optimistic we're getting closer to a solution in the coming months.

Alongside these efforts, we've continued delivering real outcomes for our government and community partners this year. We supported the New South Wales government to open Sydney Gateway with its connection into WestConnex. Today, Motor has saved nearly 40 minutes on a trip from Parramatta to the airport compared to a decade ago and Sydney has 1 million more people. And as freight demand increases, we're working with the Victorian government to trial livestock vehicles and EV trucks on CityLink, opening up new journeys for the freight industry.

Off the road, we've continued to invest in community infrastructure, creating 14 kilometers of new walking and cycling paths that will be delivered as part of the West Gate Tunnel project later this year. Delivering this clear and tangible value is a real differentiator, underpinning the opportunities ahead for us. We've also worked hard to become a more nimble and efficient business working smarter and streamlining the way we operate. This year, that included a comprehensive organizational review and the difficult decision to reduce our workforce. The decision was not made lightly. And when it was announced, we acted quickly, decisively and with care for those impacted. It was hard, but we're confident it was the right decision. With our new operating model now in place, we're starting to achieve sustainable efficiencies in many areas of the business.

We've engaged suppliers to drive better value, streamlined our technology platforms to make work easier for our people and refined our asset life cycle planning to ensure we're managing resources as effectively as possible. And it's still early days. We continue to look for opportunities for efficiency ahead for us. Importantly, the capital being released is being invested for our future. This means improved outcomes for security holders, more efficient operations and direct benefits for our customers. The proactive resheeting of the M2 in Sydney, which is currently underway, is 1 such example. We have an exciting year ahead of us. with nearly $13 billion worth of projects opening in the next 12 months.

In Virginia, the 495 Northern Extension project is nearing completion with new lanes set to open to motorist shortly. In Sydney, the M7 M12 integration project will improve connections to the new Western Sydney Airport and the surrounding development precinct when it opens next year. And here in Melbourne, we're firmly in the final stages of the West Gate Tunnel project. As we've noted before, projects like these are naturally complex and not done until we're done. But we're looking forward to easing congestion in Melbourne's west, and we're planning with the state for a successful opening later this year.

Looking ahead, we have over $10 billion of potential new project discussions in the pipeline. In Brisbane, the Logan West upgrade is in progress. And with the Olympics fast approaching, we welcomed the Queensland government's 2032 delivery plan, which includes upgrades on the gateway motorway. On the back of strong performance in the North American business, we're also in the planning stages of our bidirectional project on the 95 Express Lanes. And we're part of a consortium exploring new projects in Atlanta and Nashville.

Taking a partnership approach helps us enter new markets in a disciplined and lower risk way where we can build our presence over time and support long-term value and distribution growth. More importantly, our deep mobility expertise and customer-first mindset is opening the door to new kinds of opportunities. We're encouraged to see both the Australian and New Zealand governments commit to finding solutions on road user charging. We firmly believe that the customer needs to be at the heart of any road user charging system. And we're exploring how we can support and help shape these important developments. So we're thinking broadly about the strengths we bring to the table and where we can add value through our physical and digital assets.

To finish, I'd like to thank my fellow Board members and my executive committee colleagues for their continued support. And I'd like to recognize the whole Transurban team for your dedication and hard work in what has been a year of great effort. Thank you also to our securityholders for your ongoing support of Transurban. We're entering FY '26 with momentum, a solid foundation and a clear ambition to continue driving value. We look forward to another successful year. Thank you.

Thank you, Michelle, and transcripts of my address and that of the CEO are available on the Transurban website and on the ASX.

Before we move to the formalities, I'll begin by outlining the procedures for today's meetings. These are security holder meetings. As in past years, only security holder holders, their attorneys, proxies and corporate representatives are permitted to vote and ask questions.

With the hybrid meeting format, there are 3 ways questions may be asked. As attending in person, you may ask a question if you hold a blue or red card. When I invite questions later in the meeting, please make your way to a fixed microphone point and provide your name to the microphone attendant. If you're unable to make your way to the microphone, please raise your hand, and we'll bring a microphone to you. We'll take questions following the introduction of all items of business.

For those attending online, you may submit written questions through the online platform by clicking on the Q&A icon and following the prompts. Written questions can be submitted at any time. To help with the smooth running of the meeting, we ask online participants to submit your questions now. If you are attending online and wish to ask a question verbally, you'll need to follow the instructions below the broadcast window. We recommend that you wait until the question time begins before connecting to the audio line to minimize the time queuing to ask your question.

Questions which may be moderated grouped or summarized will come through to me as chair of the meetings, and I'll either answer it myself or I'll pass it on to the most appropriate person to answer it. That's if it's a hard question. If a security holder has a question that relates to the online meeting technology, please contact the helpline detailed in our AGM online participation guide published on our website.

To enable all security holders a reasonable opportunity to ask questions you are requested to ask no more than 2 questions at a time. Please keep your questions short and to the point so that as many people as possible have the chance to ask a question. Please ensure your question is relevant to security holders as a whole. If you are an eligible security holder, a representative or attorney of an eligible security holder or a proxy for an eligible security holder, you are entitled to vote.

For those attending the meeting in person at registration, you should have been issued with a blue admission card and voting card. If you are representing if you are representing or are a proxy for more than 1 security holder, you will have been provided with a separate admission and voting card for each separate capacity in which you are attending the meetings. Relevant voting instructions are printed on the reverse of your blue card. When you complete your card, please indicate the manner in which the votes are to be cast by placing a mark in the for, against or abstain box for each resolution.

If you have difficulty in completing your voting card, please raise your hand and a representative from Computershare will assist you. You do not need to put the percentage or number of votes you are voting unless you wish to do so. Before placing your voting card in the collection box, please ensure that you print your name on the bottom of the card. At the conclusion of the meetings, please place your voting card in 1 of the collection boxes located near the exit. If you are attending the meeting online and you are eligible to vote, a vote icon will appear on your screen. Selecting this icon will bring up the list of resolutions present you with voting options.

To cast your vote, simply select 1 of the options, for, against or abstain for each resolution. A tick will appear to confirm receipt of your vote. You can change your vote at any time up until the poll is closed by selecting Click Here to change your vote. Proxy holders are reminded that you must vote in accordance with the proxy holders' directions. Any directed proxies that are not voted at the meeting will automatically defer to the chair of the meetings. And as Chair, I'm required to vote those proxies as directed. All proxies that are open and available to the Chair of the meetings will be voted in favor of the relevant resolutions.

Again, if you require any assistance, please contact our securities registry, Computershare Investor Services. Doris Grave of Computershare will act as returning officer. And I appoint you and Barron of PwC the group's independent external auditor, to be the scrutineer for all resolutions.

The results of today's meetings will be announced following the meeting on the ASX and on Transurban's website. I now turn to the formal items of business at today's meetings. The notice of meetings set out information regarding items for consideration at today's meetings. I'll introduce each item of business separately and then invite questions on all items of business together after the items have been introduced.

We have 4 items of business today. Items 2 to 4 include resolutions that require a vote. Item 1 is the receipt and consideration of the Transurban Group financial report for the year ended June 30, 2025. This has been approved by your Board and provided to you with Transurban's 2025 corporate report also available on Transurban's website. There is no need to pass a resolution on the financial report. However, securityholders and proxyholders are welcome to ask questions in relation to this following the introduction of all items of business. Security holders and proxy holders will also be given a reasonable opportunity to ask you Barron of PwC, relevant questions relevant to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted in preparation of the financial statements and the auditor's independence. All questions to the auditor should, in first instance, be addressed to me as Chair. And if appropriate, I will ask Mr. Barron to address the meetings.

Item 2 of business on the agenda concerns the election and reelection of directors. Marina Go was appointed as an independent Non-Executive Director in December 2021. Marina is currently a member of the Remuneration, People and Culture Committee and the Nomination Committee. Marina has worked in executive roles across a range of listed and private companies and in nonexecutive director roles across a diverse range of sectors.

Her executive career included over 25 years' experience in branding, marketing, digital technologies and change leadership in the media industry. A copy of Marinas bio is set out in the notice of meetings. In accordance with the constitutions of Transurban Holdings Limited and Transurban International Limited, Marina Go offers herself for election. I confirm and reconfirm the Board's view that Marina's contribution as an experienced executive with deep expertise in brand customer and community interactions with a focus on innovation are highly regarded by the Board.

In recommending her reelection, the Board notes Marina's contributions as a valued member of the Remuneration, People and Culture Committee and the Nomination Committee. The directors other than Marina unanimously recommends her reelection. I'll now ask Marina to address the meetings.

Thank you, Craig, and good morning, fellow security holders. It's a privilege to serve on the Board of Transurban, an organization that plays a critical role in our communities. Our role in connecting people, families and communities and enabling them to travel safely and in less time between their homes and the workplaces is what excites me about the importance of Transurban's mission.

We operate with a social license from the communities and stakeholders we serve, and that requires continued earning. I have significant and relevant executive and nonexecutive experience in understanding the customer perspective, and it is through that lens that are well placed to provide meaningful contribution to this critical area. As Craig said, I joined the Transurban Board on December 1, 2021, and I'm a member of the Remuneration, People and Culture and Nomination Committees. My executive roles and nonexecutive roles have included leading organizations through headwinds, which is increasingly important in globally uncertain times.

I've served as a Chairman and Non-Executive Director on ASX-listed companies, private companies and not-for-profit organizations across a range of sectors, including energy, retail, technology and government. Also an experienced People and Remuneration Committee Chair, Sustainability Committee Chair and Audit and Risk Committee member. I'm passionate about innovation, convenience and mobility, and that has shaped my board portfolio. I also have considerable experience in the areas of digital technology, reputational risk and stakeholder engagement as well as diversity and inclusion.

I lead a full and rewarding career as a Nonexecutive Director. I have the time to devote to my role as an independent Nonexecutive Director of Transurban, which I've demonstrated since joining. I hope that you reelect me to the Board for a second term as it's an organization that I'm honored to serve. Thank you.

Thank you, Marina. I'll now move to the proposed reelection of Dr. Sarah Ryan as a Non-Executive Director. Sarah was appointed as an independent Non-Executive Director in September 2023. She is a member of the Remuneration, People and Culture Committee and the Nomination Committee. Dr. Ryan is an experienced Non-Executive Director and former Energy executive with more than 30 years of international experience in the oil and gas industry, including holding various technical, operational and leadership roles both in Australia and overseas. A copy of Sara's bio is set out in the notice of meetings.

In accordance with the constitutions of Transurban Holdings Limited and Transurban International. Sarah offers herself for reelection. I reconfirm the Board's view that Sarah continues to bring a deep understanding of large infrastructure projects across various industries. -- and her expertise and experience working with large global companies involved in complex, capital-intensive projects is highly valued by the Board. In recommending her reelection, the Board notes Sara's contribution as a member of the Remuneration, People and Culture Committee and the Nominations Committee. The directors other than Sara unanimously recommend her reelection. I'll now ask Sara to address the meetings.

Thank you, Craig, and good morning, everyone. So I was delighted when I was invited to join the Board of Transurban in 2023. As I believed I could make a real contribution to this company. And I'm delighted to learn that this is true and I'm here again today. So my executive background is in the energy industry with more than 30 years experience worldwide mostly around operations, engineering and contracting as well as technology development and innovation.

I have also spent 10 years in investment management focusing on the global energy and natural resources industries. I'm an elected fellow of the Australian Academy of Technology and Engineering, where I currently chair their energy forum, and I hold a PhD in geology and geophysics I'm currently a Non-Executive Director of 3 other ASX-listed companies, being Horizon, [ Vive Energy and Calix ], and I'm a former Director of Outside Energy, [ OS Minerals and AXSolutions ] from Norway.

My nonexecutive experience covers various roles in energy, rail transport, fuel and retail, pipeline construction, mining, defense, all field technology and decarbonization of heavy industry. Many of the issues I've had to deal with over that time in both my executive and nonexecutive roles are very relevant to Transurban's business today and in the future. For example, large and complex construction projects with high levels of interest from a broad group of stakeholders, including the community and government, the emphasis on safety and risk management. the opportunities and challenges of new technology and innovation in infrastructure and the nature of the business as a provider of key infrastructure for broader communities. I confirm I continue to have the time to devote to this role. I believe my background and experience leave me well placed to continue to contribute to the company's future, and I'll be delighted to be elected as a director by securityholders today. Thank you.

Thank you, Sarah. I'd like to remind attendees that we will take questions following the introduction of the remaining items of business.

Item 3 of business on the agenda is the adoption of the remuneration report of Transurban Holdings Limited and Transurban International Limited for the financial year ending 30 June 2025. Voting on this resolution is as an item of business is advisory only. Transurban's remuneration strategy is designed to enable and drive our business strategy and sustainable long-term growth. The report aims to provide you with an understanding of the links between Transurban's strategy, its performance and executive remuneration as well as the framework we have in place to ensure effective governance of remuneration matters.

The report also details the FY '25 remuneration arrangements and outcomes for your directors and senior executives. In determining the remuneration outcomes for FY '25, the Board assessed Transurban's performance in terms of financial and nonfinancial measures set out in the group performance scorecard and took into consideration the alignment with securityholder experiences. The group FY '25 short-term incentive outcome was 105% of target with a year-on-year increase in proportional operating EBITDA of 7.4% and a distribution growth of 4.8% aligning STI outcomes with the experience of securityholders.

In determining the STI outcomes of the CEO and executive key management personnel, the Board considered both individual performance and all factors that have contributed to the overall group result. The Board considers the resulting STI outcomes to be aligned with the experience and expectations of securityholders. I now turn to the final items of business. Item 4 on the agenda is the approval of proposed grants of deferred securities and performance awards to the CEO and Managing Director, Michelle Jablko under the Transurban Group's deferred short-term incentive plan and long-term incentive plan. The terms of the proposed grants are set out in the explanatory notes in the notice of meetings. If securityholder approval is obtained, 2 grants of equity will be made to Michelle.

The first grant represents 50% of Michelle's FY '25 STI, approximately $1.1 million. This amount will be deferred into Transurban stapled securities which will vest if Michelle remains employed with Transurban for a period of 2 years. This creates a strong retention proposition for the CEO and ensures that half of her STI award remains subject to Transurban security price, which is intended to support increased alignment between the CEO and security holders.

The second grant consists of performance awards, which will be granted to Michelle as the long-term incentive portion of her FY '25 remuneration package. Each performance award entitles her to 1 fully paid ordinary Transurban stapled security at the end of the 4-year performance period. subject to satisfaction of 2 equally weighted performance measures. The first measure is relative total shareholder return, or TSR, measured against the bespoke comparator group.

The second measure is free cash flow per security, which reflects the Transurban Group focused on maximizing free cash to drive security holder return. Approval is being sought to grant a total number of performance awards to the CEO not exceeding 217,816.

In a moment, I'll invite questions on all items of business. But before I do, details of the proxies received for each item of business are being shown on the screen. We encourage security holders to submit questions in advance of the meeting. We'll now address a question received from a number of security holders prior to the meetings before turning to questions in the room and any questions online. If you have a question, please make your way to the microphone now.

Fiona, can you please read the question?

Chair. We received the following question ahead of the meeting. Transurban's pipeline of work appears to be drying up. Major projects in Sydney and Melbourne effectively finished a bit of road widening in Brisbane but what else is going to happen?

Well, I think that question was probably answered in Michele's speech. We've got $13 billion of projects delivering in the current year and we have a pipeline currently of conversations around a pipeline of in excess of $10 billion of projects across multiple jurisdictions from Queensland, New South Wales, the U.S. and potentially in New Zealand. So I think the chap that asked that question, I think that's the response that we're actually very optimistic about the opportunities that sit in front of us. because all of the criteria and the reason for being for Transurban today, as I indicated in my speech, are, in fact, even stronger than they were when we listed in 1996.

So any questions in the room? Do you have a question from Michael from the Australian Shareholders Association.

Good morning. My name is Mike Muntisov, and I'm a volunteer representing the Australian Shareholders Association. Today, I hold proxies from 277 securityholders accounting for approximately 1.9 million votes. And thank you to those security holders who appointed us as their proxy. I have a couple of questions to start.

You've mentioned, in fact, just now several projects due to open shortly. And I'm sure people in the room are very looking forward to the opening of the West Gate Tunnel after several years. But something you haven't discussed is the impact of the Western Sydney Airport, which is due to open next year. What does your modeling suggest will be the impact on revenues of this airport opening.

I'll pass that to Michelle. I think she's the appropriate 1 to answer. Thanks, Mike.

Thanks, Michael. So that part of Sydney is experiencing very significant growth, a quite significant population growth, new business formation. So it's quite a -- it's quite a growing part of Sydney. When we announced the project, what we explained to the market was during construction, we probably have about a 5% impact on traffic. And then from that lower base, it would increase about 10% on opening because the congestion was already in that corridor. So we're expecting quite a quick ramp up.

Yes. I was more referring to the airport itself. When the airport opens. In terms of what do you expect would happen with revenues, toll revenues in your network?

So we'll get -- not much of that project was actually dependent on the airport. It provides a very important connection into the airport. But for us, the real value in that project is actually the congestion that already exists in that corridor.

But what about diversion from the current airport. I mean how does that all play out.

It was very small component. Yes, very small component.

Okay. You flagged some development opportunities in the U.S. That doesn't necessarily mean you'll need to raise capital if you're successful. But should a capital raise be required for any reason, the ASA advocates for the fairest method of raising for all existing security holders, and that is a renounceable entitlement offer, such as the [ Petrio ]. And we note that Transurban has been an exemplary user of [ Petro ] in the past, and we thank you for that. What's Transurban's current view on methods of capital raising?

Mike, look, you're absolutely right. We have been -- and we are always very focused on all shareholders and not just 1 group of shareholders. So that is always a conversation between the executive and the Board. And we have favored Patrio and renounceable rights issues in the past. And all things being equal, if we were to come to market at some point. But I can tell you now there are no current plans or expectations that we will be [ go ] to market in the foreseeable future. But if that changed, that would be the starting point. But it would be contingent on the size of the capital raising if we were able to go for a smaller capital raising or a larger capital raising.

So I think we need to have retain flexibility, but your premise of making sure that we are fair to all shareholders is the premise that we obviously start with.

We do have quite a lot of organic capacity as well that you commented on the strength of the balance sheet. And as we continue to drive performance of the business that will create more and more organic capacity as well.

Thank you, Mike. Are there any more questions in the room? No.

Any questions online, Fiona?

Chair, we've received no further questions online.

Okay. Thank you. Excellent. So if -- as they are -- oh, Mike, you come me back for a second.

I thought there might be some other questions, but seeing there isn't I seem to have a monopoly on the questions here.

That's okay.

I have a question for Sarah Ryan. Sarah. The company policy is for directors to purchase Transurban shares to the equivalent value of 1 year's fees over 5 years, which works out at about 15,000 shares. Sarah's shareholding in the company is lagging on a pro rata basis. And last financial year, she purchased 1,000 shares. So we'd like to understand what Sarah's plans are going forward in terms of purchase of shares.

So Mike, I might take that question because we do discuss this in the board room. At periods of time through any particular year, and that's certainly been relevant for us when we're in negotiations with, for example, the New South Wales government. We have blackout periods because we're uncertain as to what -- the exact outcome may be at the exact point in time.

As Michele said, we're very confident and very happy with the progress and the relationship with the government and also the progress that we're making. But we take -- at a board level, we take a fairly cautious approach to directors engaging in either by selling shares or management buying or selling shares. So I think it is fair to say that our blackout periods in the period of time that Sarah has been on the Board have constrained her ability to purchase. But 1 thing I can guarantee is that Sarah, like all directors will meet their obligation as is currently stated over a 5-year period. They will have a minimum of shareholding to cover their fees. So I can guarantee that.

We have 1 more question in the room, I think. Yes.

Chair, can I introduce John O'Leary.

Morning, John.

Morning. Looking at the report, I think it was early August, I was I was actually pleased with what I read. And I read the newspapers and my question is Melbourne is 1 approximately 1.1% growth, and you refer to mainly airport traffic and we can travel. There's talk of legislation for working from home in Melbourne. So I was curious to know your opinion on proposed legislation from working from home. I want whether it would impact Melbourne's traffic. I can't have a feeling it might not, but [ should have stayed here ].

John, it's a very good question and 1 that we have talked about inside the boardroom. And what I can say to you is currently in Melbourne CBD, the -- on average, people are coming -- currently coming to work at about 3 days of the 5-day week. And what is being proposed, there's clearly a lot of water still to pass under the bridge on that potential legislation is -- wouldn't make any material change to that outcome. And I do note that the September quarter of this current financial year, we've just reported today that traffic growth in Victoria was up 3.1%. So it has recovered. I would say the lower number you referred to, which is absolutely spot on was fairly heavily affected and impacted by construction activity in and around the West Gate and CityLink projects. That is now beginning to clear.

So from our point of view, I think having flexibility, always having flexibility both for the employer and the employee is the ideal circumstances, but we're not expecting if there was legislation, and I'll pass to Michelle for an additional comment. But if there was legislation, we're not expecting a material impact.

Maybe the only other thing I'd add, Chair is with the new West Gate Tunnel project opening, that's in a real growth part of Melbourne in the West and it has a whole different reason for being. And so just to add that to the Chair's comments as well.

Fiona, any other questions online?

Sir, we have no further questions online.

Okay. As there are no more questions, that concludes our discussion of each of the items of business. Security holders and guests that concludes the business of the meetings, and all that remains now is to complete the poll by submitting your votes. If you have not already done so, please complete your voting now. And once again, we have displayed on the screen the proxy instructions for each item of business.

For those attending the meeting in person, please lodge your completed voting cards in 1 of the collection boxes located near the exit. If you require any assistance, please raise your hand. And as I've said before, a representative from Computershare will help you. The poll will close in 10 minutes after the conclusion of the meetings, and rather than delay the closing of the meetings, the results of each poll will be announced to the ASX and published on Transurban's website once the votes have been counted and checked.

I thank all of you for your attendance and participation at today's meetings. As Subject to finalization of the poll, I declare the Annual General Meeting of Transurban Holdings Limited and Transurban International Limited, and the meeting of Transurban Holding Trust closed.

And for those people attending in person, I hope you are able to join me and the other Transurban directors, together with senior execs for refreshment in the foyer. Thanks for your attendance. Cheers.

Thank you for standing by, and welcome to the Transurban Group FY '25 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Craig Stafford, General Manager, Investor Relations. Please go ahead.

Good morning everyone, and thank you for joining us for Transurban's 2025 Full Year Results Briefing. Transurban acknowledges the traditional owners of the land throughout Australia, and we pay respect to elders past and present. We acknowledge our roads and infrastructure are built on country with deep respect we incorporate the voices of First Nation peoples in our approach, supporting equitable access to mobility across communities.

We're joined today by our CEO, Michelle Jablko; and CFO, Henry Byrne. And together, they'll take you through the presentation that we launched with the ASX earlier this morning. We realize it's a very busy day today. The presentation should take about 20 minutes, which will leave us plenty of time for Q&A and maybe an early finish.

I'll now hand over to Michelle to get us started.

Thanks, Craig, and good morning to everyone on the call. This year, we worked hard to deliver and to set ourselves up for next year and beyond. We did what we said we were going to do. And today's strong results shows that. We increased distributions by around 5% and outperformed our cost guidance. We increased revenue by 5.6%. Traffic grew across all markets and we achieved 7.4% EBITDA growth, keeping our costs flat.

We also took decisive action to be a more efficient growth-ready business. This has given us a platform to increase our distributions by 6% next year, creating longer-term value for our stakeholders. Over the past year, we've spoken about some of the complexities we had to work through in our business. We needed to reset our cost base. We needed to demonstrate more value to our customers and we needed to reset some of our relationships. We have strong momentum on all fronts with some important milestones coming up in the year ahead. We're well progressed on New South Wales toll reform and closer to outcomes that are positive for all.

We have 3 major projects opening in the next year, each offering significant benefits to road users. In Australia alone, these new roads are expected to save over 28,000 hours of travel time each day. bringing relief to fast-growing communities. And we're exploring new ways to grow using both traditional and innovative approaches. We've realized efficiencies across every part of our business, making us more agile with a sharper focus. And we've reallocated investment into our customers, bringing together our physical and digital infrastructure as a point of differentiation. With these foundations coming together, we're in a strong position to act on new growth opportunities and keep the momentum going.

With traffic, we're seeing resilient growth across all markets. North America performed strongly this year with traffic up 6.4%. Sydney and Brisbane delivered solid underlying growth even with the impact of Cyclone Alfred in Brisbane. Large vehicle traffic grew strongly in Brisbane, up 4.1% for the year. WestConnex saw a boost from the opening of the government's Sydney Gateway cutting travel times to the airport by up to 17 minutes for a round trip. And as we've touched on before, construction projects impacted traffic growth in Sydney, they should start to ease in FY '26. In Melbourne, traffic growth grew 1.2% with more airport-related trips and weekend traffic. Construction impact started to abate through the year and office occupancy remains at around 60%.

So let's now look at our markets a bit more closely, starting with Sydney. One of our biggest near-term priorities has been finding an outcome on toll reform that works for everyone. And we're optimistic we're getting closer to a solution. You would have seen recent commentary from the New South Wales government stating discussions are collaborative and constructive. We're continuing to work positively with government to deliver solutions that meet their priorities while protecting the significant investment we've made in Sydney's road network. As part of these discussions, we're making good progress on initiatives like toll note simplification. All of this has taken time. The network is complex and there are many stakeholders involved. And we expect that the government will have more to say later this year.

Also in Sydney, our M7-M12 integration project remains on track to open mid-next year. And looking ahead, growing congestion in the Northwest presents further opportunities to enhance our network as the city grows. In Melbourne, our longer-term fundamentals remain strong, and we're well positioned to benefit from macro trends like population growth. We've also made significant progress on the West Gate Tunnel project. As you can see on the slide, we're more than 95% complete, which is a big move from even a few months ago. As we've noted before, projects like these are naturally complex and not done until we're done, but we're now firmly in the final stages. We're planning with the state for a successful opening and looking forward to easing congestion in Melbourne's West.

There have been a number of reports that the contractor has had some challenges, none of which are new or have slowed the project down and work continues at pace. Claims are not unusual at the end of the project. And if any claims are made, we'll assess them in the ordinary course. Our Brisbane market continues to show great potential. It has the fastest population growth of all our markets with congestion being a key concern. And there's also a sense of excitement as we get closer to the 2032 Olympics. The Logan West upgrade is progressing as we undertake investigative works and engage with the community. While there's still work to do, we're planning to submit the binding upgrade proposal in 2026, which is a key milestone. And more recently, we welcome the government's 2032 delivery plan, which includes upgrades on the Gateway motorway. We're working through the details of this with the state with our roads being central to connecting sporting venues, tourism hubs and the broader city for the games and supporting Brisbane's growing population.

As I mentioned, North America was a real standout this year. For a business that makes up around 7% of our traffic, it's having an outsized impact, delivering nearly 25% of overall revenue growth. Drivers are clearly seeing the value in our Express Lanes and not just during the peak. We're seeing traffic grow even outside congested periods and our pricing reflects that value. While everyone is watching the U.S. economy closely, we know that the need for infrastructure is very local. Today, North America contributed more revenue than it did 5 years ago, and we own 50% less. We're confident there's a lot more upside to come from our assets, particularly with the Northern Extension project opening this year.

And more broadly, our partnerships in the U.S. are enabling us to explore new cities in fresh ways, striking the right balance between risk and returns and creating optionality for longer-term growth. Delivering clear value to customers really matters. It's an important differentiator. Both as governments consider new projects and as new policies like road user charging emerge. This year, we've continued to take clear targeted steps to enhance the entire customer experience. With the new travel time savings feature in the Linkt app, customers can now see exactly how much time they're saving bringing the benefits of our roads to life. And we're expanding our Linkt rewards program with good feedback from customers and our rewards partners. So we know there is substantial value to able to be unlocked in this space.

You'll be aware of the significant organizational change we made this year. It was a hard decision and not one we took lightly. So when we announced the change, we acted quickly, decisively and with care for those impacted. It was hard, but we're confident it was the right decision, and we're already starting to see the benefits. We're operating with greater focus, becoming more nimble and dynamic. And importantly, the capital release is being reinvested for our future. This means improved outcomes for security holders direct benefits for our customers and more efficient operations, making work easier for our people and strengthening the safety and performance of our roads for our customers.

It's a big year ahead. We have nearly $13 billion worth of projects opening in the next year. These are significant milestones that will drive growth and unlock new value. Beyond that and with a strong balance sheet behind us, we're engaged with partners in more than $10 billion of new project discussions across existing and new markets. And the initiatives I've outlined today like our digital investments and our focus on customer personalization are opening doors to new types of opportunities. Take road user charging, for example. We're encouraged to see the federal government considering this as part of the productivity Summit. And the New Zealand government also announced they'll be taking a modern approach to road user charging. With our customer focus and mobility expertise, we're examining ways to support these initiatives. So I feel really pleased with the progress we've made, and I'm excited about the opportunities ahead.

Let me now pass to Henry to take you through some more details on the results, and then we'll come back and go through questions.

Thanks, Michelle, and good morning, everyone. We've set out our statutory results on Slide 15, but I'll move to the next slide where we've set out our proportional results. Michelle has outlined a number of key areas where we've made good progress, and this is showing through again in the operating leverage in our numbers.

Proportional toll revenue grew 5.6% to $3.7 billion, and that was supported by resilient underlying traffic. Proportional operating costs remained flat year-on-year at $947 million, which was ahead of the guidance that provided at the half year below inflation and that contributed to proportional operating EBITDA growth of 7.4% and a margin improvement of 140 basis points. Free cash increased 7.6% with distributions, 99.5% covered by free cash. And we did -- as we did in the first half results, you'll see we've shown proportional operating EBITDA this half to highlight the performance of the business, excluding the first half litigation impacts that we announced in late December last year. And just to refresh your memory, this litigation relates to the roaming fees payable by ConnectEast to Transurban. As we flagged in December, we had an initial judgment against us in that matter, which found we'd overcharge fees. The amount claimed by ConnectEast is in the order of $10 million a year since 2009. But I think it's important to stress that this is an issue specific to CityLink that does not impact customers, and we're currently appealing this matter.

When we look at our funding outcome and the position of the debt book, we're really pleased where the year has landed. Our weighted average cost of Australian dollar debt remained flat year-on-year at 4.5%. And this was mainly due to some well-timed hedging and some of our floating rate exposure that we carried over the financial year end. And you can see as at June 2025, our debt book is hedged at 92.5%, which is up from 88.2% in June last year. Looking ahead, despite the higher interest rate environment, we're only expecting marginal increases in the cost of funding given the staggered maturity profile with no more than 10% of the debt book matures in any given year. I'll discuss our liquidity position in more detail shortly, but the headline is that it remains strong with $3.7 billion of corporate liquidity and in excess of $1.7 billion in balance sheet capacity, which can be utilized to fund some of the opportunity pipeline that Michelle spoke to a moment ago.

Slide 17 presents the free cash bridge, and that shows a 7.6% or $141 million increase, and that's mainly driven by higher EBITDA, which was partially offset by some higher proportional net finance costs. While the weighted average cost of debt remains steady year-on-year, finance costs increased by $35 million, and this was driven by approximately $1 billion of additional drawn debt to fund current projects, and that's really an investment in future growth. Interest income also declined slightly, which reflected lower average cash balances over the period. In addition, tax paid increased marginally across pockets of the group, and we also saw the commencement of debt amortization across titan. So overall, the result reflects strong operational leverage and disciplined cost control, which has flowed through to free cash growth.

If you move to Slide 18, you'll see a clear illustration of the operational performance I touched on earlier. The year-on-year operating EBITDA improvement was supported by particularly strong results from our Transurban Chesapeake business in Virginia, as Michelle just mentioned. And when you couple that with flat cost growth across the group, this contributed to the margin expansion of 140 basis points that I spoke to earlier.

A key feature of the result was the flat proportional operating costs, and we've set out some more detail of that on Slide 19. Over the past year, we've remained focused on driving efficiency across the business. And we've now been able to achieve this for the past couple of years. We've strengthened our supplier engagement to drive better value, streamline our systems to unlock technology efficiencies and refine our asset life cycle planning to ensure we're managing resources as effectively as possible. And we believe there's more opportunity in front of us in relation to this. At the half year, you may recall, we noted that part of the cost outperformance was timing related with maintenance spend expected to be more heavily weighted to the second half, and that did play out as anticipated, with approximately $80 million of the spend in the second half compared to $50 million in the first half on maintenance. Going forward, we anticipate the proportional group spend for maintenance to increase over the coming years as a number of the assets enter the new cyclical phase or the next cyclical phase, notably with WestConnex entering its first major cycle. We do see meaningful opportunities to refine our maintenance program and asset life cycle models with the new enterprise operating model now in place, we're better positioned to manage maintenance costs, unlocking efficiencies and supporting long-term portfolio optimization. Looking ahead, we expect cost growth to remain below inflation in FY '26, excluding new assets. and that's also subject to the level of development activity, which can vary with the opportunity set in front of us.

If I turn to our balance sheet and funding summary. After accounting for committed project spend and distributions, we estimate balance sheet capacity in excess of $1.7 billion, and that positions us well to support further growth. And we expect additional capacity to emerge over time. on the basis that EBITDA is expected to grow. As you can see on the right-hand side of the slide, our treasury team already progressed on the funding task for FY '26, refinancing $700 million of the corporate debt early in June. And finally, despite some volatility in debt capital markets through FY '25, we were able to consistently secure strong outcomes when accessing debt markets. And this really reflects the depth of our funding relationships and the quality of our credit profile.

Slide 21 brings together our capital allocation framework, and this is one that we presented previously. It provides a clear lens into how we think about the portfolio, delivering consistent growth in distributions while creating capacity to reinvest in the business and support future growth. The framework illustrates how we think about funding of distributions and growth opportunities. And in FY '25, we delivered 4.8% growth in distributions per security, which was underpinned by 7% free cash per security growth and 7.4% operating EBITDA growth, and that demonstrates the strength of our model and the momentum within the portfolio. We invested $700 million in CapEx during FY '25 and have $600 million committed for FY '26 to finish out those projects. Our balance sheet remains well positioned to support growth opportunities, and we're actively assessing opportunities across the portfolio and in new markets.

So I'll wrap by saying we're very pleased with the financial performance this year. We've seen resilient traffic growth, disciplined cost control and margin expansion, all underpinned by a clear focus on operational efficiency. These outcomes are setting a strong foundation for sustainable growth that's going to drive returns. From a funding perspective, we're in a robust position. Our balance sheet continues to support delivery of committed projects and we're actively evaluating new opportunities, both within the existing portfolio and in adjacent markets where we see potential to unlock further value.

I'll now hand back to Michelle for some concluding comments.

Thanks, Henry. Today's result reflects the tremendous progress we've made over the year and the tangible outcomes we're delivering. We've moved the dial on some of our biggest opportunities from progressing toll reform to becoming a more customer-focused business and resetting our cost base. And we have emerged a more nimble and efficient business positioned for growth. We're entering FY '26 with momentum, a solid foundation and a clear ambition to continue driving value.

Let us now open up for questions.

[Operator Instructions] Your first question comes from Andre Fromyhr with UBS.

Firstly, I just wanted to ask about the guidance for distributions at $0.69 per share and recognizing that we're in the new distribution policy settings of the 95% to 105% power ratio. I mean, should we be interpreting the 69% of a point estimate at 100%? And then the uncertainty around traffic and performance is the wiggle room around that? Or are you somehow sort of preparing your cash flow coverage at an alternative level for FY '26?

Henry to answer that. Thanks, Andre.

Yes, sure. Look, we don't provide guidance on where we think we'll sit within the 95% to 105% range. But clearly, the Board wouldn't put guidance out unless we were comfortable in terms of our ability to meet that subject to a number of variables. So that's probably how I'd answer that, Andre, in terms of where the coverage range sits. We do obviously contemplate different scenarios around traffic. We do have an ongoing focus around cost discipline within the business, and that's going to remain into FY '26, and you can hear from the cost guidance I've just given around an objective or guidance to come in below CPI growth again this year, obviously, excluding new assets, it tells you that, that obviously will be an ongoing effort that will then support the distribution outcomes.

Yes. Maybe what I'd add to what Henry said is when we think about the distribution, one of the reasons we changed the policy to 95% to 105% was just being conscious of the glide path of distributions as well. So it all sort of gets taken into account.

I guess a related question. There is a comment in the pack around the expected contribution from West Gate Tunnel to be broadly neutral to free cash flow. Is that a comment specifically about FY '26? Or is that sort of -- is that true for a longer period of time? And maybe you could remind us what is the run rate of cash finance costs that switch on once you start operating the asset.

Yes. So this is a comment -- this is consistent with comments we've made for some time, but I'll let Henry to go through the detail of that.

Yes. So there's 2 components to it. The comment around being broadly neutral of free cash is a comment we've been making now for a number of periods, and that does relate to FY '26 grade. You would expect as traffic and revenue ramp up on that asset over time that it would start to make a positive contribution in the years beyond FY '26. In terms of the quantum of capitalizing interest costs, you'll see it in the back of the deck. I can't recall which slide, but it's $171 million capitalized in FY '25. Slide 51, someone's just pointed out for me now.

Great. And if I can just follow up on your comment just then Henry, about the efforts on costs. If I understand the context here, the focus from the org structure changes has primarily been on headcount. So I'm curious to understand how much remaining opportunity there is on costs when you move across to sort of, let's say, the non-headcount part of the cost base?

Yes, sure. Look, the first thing to note is the changes we made to the organizational structure don't flow through into the outcome in FY '25. That's in FY '26 prospect, and it tells you that we've been doing a lot of things inside of this business beyond just looking at the composition of the workforce. A big focus is around the corporate costs, and we have been able to have quite a bit of success around rationalizing third-party costs within the business. I'm thinking about how we can get some technology rationalization going, simplifying some of our systems. But it is quite a broad-based effort going on across that corporate cost because we are continuing to invest in other areas. And notwithstanding the fact that the maintenance. The actual maintenance spend was a little down year-on-year in FY '25. That will increase in FY '26. That's certainly our expectation. And that reflects the intention for us to continue to invest in areas where we think we'll add value. For instance, you will see us undertake some maintenance on assets like the M2, where we'll do some resurfacing works in FY '26. So there'll be some swings and roundabouts in terms of where we achieved some savings and where we make some investments. But it's a very broad-based effort across a range of areas, probably with a focus more on corporate in other areas in terms of where we've been able to have success to date. SP1 Your next question comes from Adam West with JPMorgan. I'm just wondering, so EBITDA margins look to be down in SidinNorth America this year. Is there anything specific to call out there? .

I think -- and Henry can sort of jump in. When you look at EBITDA margins, because of some of the structural change we've made in the business, you're probably better off looking across the group. But it's -- it's essentially reflective of what Henry said. We've been focusing on costs, particularly in corporate. And that's where the bulk of the changes we've made have taken place and investing more into the roads. And you've got some of the roads increasing in maintenance cost, for example, and we're offsetting that with savings in corporate.

Yes, I think that covers it well. We did see an increase in road operating costs, for instance, which you will see in the breakdown and some of that is obviously centered on the New South Wales business in terms of where some of that cost has come through. But the broader piece, I think the step back is to look -- that's why we have a broader portfolio so that we can balance some of the swings and roundabouts in the movement side there. .

Yes, that's clear. Just looking at the opportunities, I'm just wondering, have you got a sense of how competitive the bidding process for the, I guess, the 285 East Lane in 24 [indiscernible] could be?

Look, it's probably a bit early to comment on that. There's -- there are a number of parties that have been shortlisted of which we're one. We think it's a region where there is lots of potential for longer-term growth. But it's probably a little early to comment on that, Adam. But one of the reasons we thought partnering made sense as we go into that kind of process, it makes sense to sort of appropriately sort of balance risk and return early. And then if we're successful, give us optionality to build a bigger presence over time. So that's why we've taken that approach.

Yes. No, that's clear. And just a final one for me. But there's been a couple of reports in the media in the last couple of weeks is [indiscernible] set to get a refund. I'm just wondering, do you have any indication on how large it would be? Or is it just largely material?

From a financial perspective, we're not expecting it to be material. It was something -- the issue is around duplicated plates, affecting not just us affecting others. We shouldn't -- we did get it wrong, we shouldn't have got it wrong. We're putting customers right and we're working with both New South Wales and governments to get the data we need to be able to put in place sort of longer-term fixes on the issue.

Our next question comes from Ian Myles with Macquarie.

Quick one. Your West Gate Tunnel, just the dealer asking for some more money, et cetera. Can you just confirm when you signed the sort of the updated contract, it was fixed price, fixed time? And are you comfortable to say that you don't carry any liability associated with that?

So what I'd say is, like, firstly, this project is going to be amazing when it opens, and we're certainly getting closer to the end, we can see the end in sight. The -- as I noted in my remarks and in the presentation, the contractors had some challenges. A lot of those have been reported on. And if a claim comes, we'll have to assess it. As we sit here today, we're not aware that it would give rise to any material liability for us. But if a claim comes, which is normal at this end of a project, we'll just have to assess it.

Yes. You're not saying you had a fixed price, fixed some contract then that you...

We did. No, we absolutely did it in. But what I'm saying is if a claim comes, we'll have to assess it in the ordinary course. As we sit here today, we're not aware of any material liability.

Okay. You sort of hinted about the M7 leading another widening in the northern section. You went through that consideration when you probably negotiate with government on the broader widening of the road. Why -- what's changed at least to move that? And can we -- should we be thinking that this might be also part of a wholesale settlement around toll [indiscernible]?

So congestion has continued to build in that part of Sydney. And clearly, there's been a lot of economic growth, a lot of new businesses being formed job growth. And it made sense to do the existing widening of the M7 first, but over time, congestion in the in that sort of M2, M7 part of the corridor has continued to grow. And it's more the M2 than the -- so we'll see. It's probably a bit early to say when and if there's going to be anything there, but we want to call it out as an increasingly congested corridor.

Have you put a proposal to government for already?

We talked to government about a lot of things around the road network. So you could imagine we have constructive discussions on the performance of the road network all the time.

Okay. And in terms of settlement of the government, is it fair to assume that this whole thing is small or not grander than what it started as?

It's probably premature until -- because it's going to be up to the government to announce what the outcomes are. I think as I sort of said in my remarks, it is a whole road network and every change has a -- it's not just about price, there's a network efficiency and network impact of any change. And so all of that's been taken into account. The positive of the government has been very clear publicly and with us that they respect the value of contracts that they respect revenue. And we know that's been something that's been really important to our investors. And within all of that, we're iterating around solutions. And hopefully, there's a bit more to say on that over the coming months.

Okay. One final question, M5 West, the maintenance provision really does look like it's being drawn down pretty hard. And I think you hinted that you're trying to negotiate that to be deferred with conversion. I was sort of wondering where that's occurred.

Do you want to take that?

Yes, That's progress -- yes, look, that's still our intention, but we haven't actually got to that agreement yet. So we just had to take it through this set of results. But I think when we look forward to future periods, we still have an intention and I'd assume likelihood that we will get to that position.

But either way, we're going to -- we've got to do -- we will do the maintenance over the right time frame. And it is because we have new partners coming into that asset. It will still be our responsibility to undertake that maintenance.

[Operator Instructions] Your next question comes from Rob Koh with Morgan Stanley.

Congrats on the results. Apologies if I'm asking a question that's covered in your presentation, I hand to join your call a bit late. Apologies I just want to ask about the I just wanted to ask a question about the Tennessee Choice Lanes possibility, and I know that it's early days, but my understanding is that these are going to be raised lanes. And will they also be a variable toll and passenger fee kind of things. Is there any technological developments that we should be thinking about for that project?

So there will be express lines or choice lines as they call them. All of the details are just being worked through at the moment. So it's a bit premature to say much more than that in terms of how they'll operate like we're literally going through that process. And -- but over the next period of time, there'll be more detail emerge, but there will definitely be Express Lanes.

Yes. Yes. Okay. All right. Well, from the big picture growth to a more detailed modeling start question. I just wanted to the best to understand how I should think about your proportional costs for FY '26. The guidance is to be below CPI for the year of, I guess, a $947 million base. And is that, I guess, inclusive of the $50 million cost target announced previously, so that would get me to my number. And then I should add on some OpEx for West Gate Tunnel. Is that the right way to think about the bridge?

Yes, that's a pretty good way to think about it. And maybe to just help people dimension the new assets we'd expect that to be about 3% to 4% growth on that FY '25 base in terms of the volume of costs that would come through associated with West Gate Tunnel and a tiny bit of next.

And of course, you get the revenue on the other side.

And you get revenue associated with that cost, yes.

Yes. Okay. Cool. All right. And then this is possibly a question for offline. But just looking at Slide 56, which is the timing of the tax, it looks like Transurban Chesapeake tax has pushed out a year? Anything in particular driving that one?

No, I don't think so. There's a little bit of movement at the margins, but Chesapeake doesn't really come online for a few years as a taxpayer. So I think that's more an anomaly in the current year.

Your next question comes from Justin Barratt with CLSA.

I just wanted to check, obviously, you have mentioned New Zealand as a new market opportunity in the past and you reflected it again in your opportunity set today. Just wanted to if we could get an update there on, I guess, broader conversations with the broader New Zealand market there.

Yes. So the New Zealand government's working through market soundings in relation to what the structure is going to look like, particularly the tolling structure around opportunities. We participated. We gave them some ideas and thoughts including some thoughts around road user charging, some of which they picked up in their recent announcements. So they're just working through that process. And then subject to where they get and what the structure is, we'll make an assessment about which if any of those projects sort of make sense. I think what we were quite encouraged about was the modern approach they're taking to road user charging with it replacing excise tax pretty quickly and a digital approach. And we think some of the investments we've been making in terms of mobility and digitization. We may be ought to be part of a solution there, but it's too early to say.

Yes. Fantastic, fantastic. And then another one I just wanted to double check on any, I guess, broader commentary on how we should think about capital releases going forward and the likelihood of those in the next few years?

Yes. You recall when we shifted the definition of free cash as the basis for supporting distributions. We moved away from capital release as being part of that. And then we stopped providing guidance on that. So there is assumptions that we have internally around our ability to access capital releases, which in the current debt market environment, we test quite carefully in terms of when we access the timing of them and the quantum of those. But the broader -- so we've moved away from giving a profile of capital releases to rather thinking about how you might dimension the debt capacity that comes on to the balance sheet or the incremental debt capacity that comes online with the increased earnings. And that is obviously dimensioned by the credit metrics that we have in place, which keep us within our current ratings band, principally with Moody's and S&P. And previously, I think we've spoken about in the order of $1 billion for every being additional debt for every $100 million. It does move around a little bit depending a little bit less at the moment than where that was when I've previously given it. But -- but in broad terms, that gives you a ballpark of the quantum of additional funding capacity that we see available to us on the balance sheet associated with the earnings increases.

Yes, fantastic. And then, Henry, just while I've got you, it's very clear that you have, I guess, a lot of cost efficiency from, I guess, that broader corporate part of your business, as you mentioned in response to a previous question. But I was curious to understand a little bit more about going forward, again, getting cost growth below inflation is obviously going to be a very good effort. Where should we think about those cost efficiencies going forward coming from? Is it a gain more from that corporate part of your business again?

Look, certainly, that remains a focus. I think the step back is we -- Michelle and I certainly see this as a multiyear journey that we're on. So we've already, I think, delivered 2 years of fairly consistent cost discipline within the business, and we've projected towards the third year now. And we are looking beyond that in terms of what we think is achievable in managing this business in a disciplined way and that should flow through to the cost line. So when you get to the specifics of where that is coming from, obviously, we made the organizational changes in FY '25, which will flow through to support that cost position in FY '26, but there are other areas. So the increasing maintenance costs, which are coming through as reflected in the provisioning are still an area that we're quite focused in on controlling and managing. And we think there's opportunity there to optimize our practices. We obviously moved to an enterprise-based model, and we're seeing some benefit in bringing those teams together to take more of an enterprise lens across the business. And then we think there's further opportunities when we look into the corporate space, particularly around ongoing technology rationalization and working to simplify systems and working to just manage that broader third body spend that comes in.

Your next question comes from Nathan Lead with Morgans.

Just 2 or 3 questions from me. So just first up, when I'm looking at the traffic growth versus revenue growth, it really stands out is what's happening in North America. So question to you is first up, how much further can the strength in the dynamic pricing on the Express Lanes go. And then secondly, just noticed there's quite a disconnect between traffic growth and revenue decline on the A25. Maybe if you can just explain those 2 things, please.

Yes. So why don't I take the first, and then Henry can cover the A25. So certainly, what we saw over the last year or 2, but very much this year was as new capacities come online, the way in which drivers are seeing the value of the Express Lanes has been really positive. And outside of congested periods, we've seen pretty big pickup in both volume and price. We think there is more to be done there. Clearly, we're all going to -- everyone is watching the U.S. economy, and we'll go through whatever cycles that goes through. But from a pricing perspective, yes, we do see more potential there, Nathan.

And then maybe if I pick up A25, look, this is an asset that has been disrupted for some time. There's obviously some decent work going on around the Lafontaine tunnel bridge repairs, and that continues to be an issue here on this asset, which is limiting the full recovery from those covered years, and that's really going to carry through forward for a little while yet. So it's not until the back end of calendar '26 that we see that issue dissipating. So I think that's probably the key issue we call out there.

Okay. Great. And then secondly, Slide 26, you note that you're expecting the impact from construction projects in Sydney to dissipate. Can you -- are you able to give us some sort of steer about what sort of impact you think that will be on traffic, I mean, we can actually work with quantify?

So maybe if I can give you kind of the macro and then Henry can step through some more of the details. So you've got -- we're in the freeway that will start to dissipate over the next year in terms of the construction impacts. Clearly, as we open that sort of in the middle of next calendar year. And we've spoken in the past about both the traffic impact from construction and then the pretty strong uplift when it opens. And then yes, the M6 is a bit unknown when that's going to open. In terms of dimensioning the impacts. Henry, do you want to add anything?

Yes. Well, maybe to call out where it's impacting most the CBD-related assets. So when we talk about those, generally, we're talking across City Tunnel, Lankton East distributor are the most impacted and their numbers were down year-on-year. And so -- and that is a construction impact compounding sort of redistribution issue that came with WestConnex on those assets. We do think we pass the peak of construction. So we do start to see a recovery in those numbers on those assets, but that is probably where the most accentuated impact has come through on the network in terms of timing, it's calendar 26 for Woringer and M7. So that's why we talk about passing the peak of construction.

Our next question comes from Anthony Moulder with Jefferies.

If I can start with West Gate tunnel, you're saying that it won't add a lot, obviously, the capitalized interest starts to be expensed, but you've received a lot of the benefits of West Gate Tunnel upfront in CityLink. But how should we think about the impact across the border network in Melbourne from West Gate Tunnel?

Yes, I'll pass that to Henry.

Yes, sure. And Michelle made the observation earlier. This is -- this is an incredible project. It's the most significant addition to the Melbourne road network in many, many years. And it will have a transformational impact on the network here. The key -- and we put some of this detail in the presentation is it goes to the catchment zones that it's going to serve. So it's alleviating the single biggest pinch point on the network for those coming in from the west, which is the growth part of the city or the highest growth part of the city, I should say. You have 200,000 vehicles a day going have a West Gate bridge currently with no other option. This effectively provides a pressure release filed for that. and then provides a way of distributing traffic to the north of the city. In addition to that, it will take thousands of trucks off local streets and provide them with direct port access. So it's quite transformational when we step back and look at it in terms of what that will then do for the broader value proposition on the network, it will strengthen significantly or restore it in some respects for those who have been weathering quite significant construction impacts now for a couple of years. And the present example, we'd point to for the kind of uplift you see or reaction you see from road users when that value is presented is what happened in Sydney with the delivery of the final pieces of the WestConnex project and particularly that M8 tunnel that gave that incredible value proposition for those commuters coming in from the West. We see something akin to that emerging on the Melbourne network for us as we look out into next year.

Very good. But the impact that you're talking to is a flat impact in FY '26 once it's open. And that's across the broader network has consequence that capitalized interest becoming expense effectively.

Yes, that's right. We're bearing in mind that the value on this project was tied to more than just the traffic and revenue of the tunnel. So this is sort of the final piece in the value puzzle for this project. I mean it has been delayed for us, obviously. But when it comes online, it will be broadly neutral as a standalone piece, and it will ramp from there to kind of add sort of incremental free cash in future years, as I referred to earlier.

Very good. And if I could switch further off to Brisbane, now that the Olympics is a bit closer, is more of a plan -- somewhat argue not a plan, but more of a plan from a stake of Queensland. Where are you as far as some of the extensions that you want to have to have signed by now in Brisbane please?

Yes. So we talk about 2 things in the presentation. So one is the Logan West upgrade, which we announced a little while ago, we're just working through the next stage of that. We've been doing some investigative works. We've been engaging with community, and the next milestone on that is to get to a binding proposal sometime next year, mid next year, I think it is. in the 2032 delivery plan that the government put out a few months ago, they included there a couple of interchange enhancements on the gateway, and we're at the early stages of just working through that. Longer term, clearly, for our business, it's about way more than the Olympics. It's about just a very strong population and economic growth that we've been seeing in Brisbane generally. And so we continue to remain pretty optimistic about Brisbane over the longer term.

There are no further questions at this time. I'll now hand back to Mr. Jablko for closing remarks.

And I'm going to hand straight to Craig to close it.

Time this morning, please come through to the IR team if you've got any questions and queries over the course of the day and enjoy what looks to be a pretty busy day ahead. Thank you.

Thanks, everyone.