Business performance
~2.5M trips on average taken on our roads every day $5B raised in bank and capital markets debt 1
Realising our growth agenda
To continue to grow over the next decade, we are focusing on how we deploy our capital and resources so they can best support our growth strategy.
The continuous balance between distribution growth and investment in new opportunities remains central to our investment proposition. In our most recent Investor Day, CFO Henry Byrne stepped through our capital allocation framework (Figure 7), which outlines how we support investment in growth and distributions. Our aim is to simplify the business and make it operate more efficiently, and also to make sure some of the key outputs, such as Free Cash and distributions are more transparent and predictable. We generate income from price and traffic growth within our existing portfolio, which in turn increases EBIDTA. Distributions will be broadly aligned with Free Cash, with expected Free Cash cover of 95-105%. From FY25, we will move to a new Free Cash definition which is better aligned to the operational performance of the business. We have also refined our target payout ratio for distributions to be within a range of 95% to 105% of Free Cash in any given year, enabling a smoother distribution profile that’s aligned with our business performance over time. We have worked to maintain a strong balance sheet for many years, and this remains a focus.
The expansion in earnings supports our growing balance sheet capacity, which is available to be deployed towards growth investment, which in turn should support earnings growth over time. External sources of capital supporting balance sheet growth include Capital Releases. We may also look to use equity to fund opportunities, noting we currently have significant balance sheet capacity to support growth opportunities on the horizon. In relation to debt, our focus remains on ensuring stable and predictable funding costs. Demand for our credit remains strong, however we continue to take a conservative approach to how we manage our debt portfolio. Our capital allocation framework (Figure 7) also calls out capital management options, such as buybacks and special dividends, which would come into play in circumstances where we had surplus capital if anticipated growth opportunities did not eventuate. Making our capital allocation more effective will have the added benefit of controlling our cost base. All of this helps us get the right balance between long-term value creation and distributions for investors.
Figure 7: Capital allocation framework Balancing capital allocation to support investment in growth and distributions
Internal capital generation
Core growth from existing portfolio (price and volume growth)
EBITDA growth
Free Cash Flow growth
Growing balance sheet capacity
Distributions growth Aim to consistently grow over time Target payout ratio range of 95–105%
Capital management Buybacks Special distributions
Growth investment Existing markets New markets Adjacencies
Deliver distributions growth and value accretion
External sources of capital Debt
• Existing debt facilities and capacity for additional debt • Asset level debt (including Capital Releases) and corporate debt • Maintain strong balance sheet including investment grade rating • Free Cash growth enhances debt capacity
Equity
• Supporting scale transactions, if required • DRP
JV partners
• Ability to balance capital requirements • Include leading global pension funds and infrastructure investors
Burnley Tunnel, CityLink, Melbourne
35
Made with FlippingBook Digital Publishing Software