Transurban Group (ASX: TCL) has just released its full year results with toll road traffic and revenues climbing higher.
Transurban owns and operates toll roads in Australia’s three largest cities and also in the greater Washington area of the U.S.A. CityLink in Melbourne is Transurban’s biggest asset which accounts for nearly one third of all toll revenue.
What Transurban Reported In Its FY19 Results
It was a busy report with Transurban not only announcing their FY19 results but also an acquisition and accompanying capital raising.
Average Daily Traffic, which is an important measure for Transurban as it is a key driver of revenue, grew by 2% whilst proportional toll revenue grew by 10.3% to $2.58 billion. Proportional EBITDA before significant items increased by 12.3% to $2 billion.
Transurban reports these numbers on a proportional basis as it better reflects the underlying performance of their assets since they have varying stakes in the toll roads they own.
Commenting on the results, CEO Scott Charlton highlighted the importance of delivering on key projects maximising the performance of operations and enhancing customer offerings.
Distribution Guidance
Transurban provided distribution guidance for FY20 of $0.62 per share. This gives the company a prospective dividend yield of 4.07% based on yesterday’s closing share price of $15.23.
Given record low interest rates and the strong possibility of further cuts by the RBA, this stands out as a good option for many income hungry investors.
Acquisition And Capital Raising
Transurban also announced the acquisition of the remaining 34.6% minority interests in the M5 West for $468 million which will give them full ownership of the Sydney toll road. The acquisition is expected to be immediately free cash flow accreditive.
In order to continue to fund such growth the company has also announced they will raise $500 million via a fully underwritten institutional placement at an offer price of $14.70.
Retail investors won’t be left out with a share purchase plan to give current owners the opportunity to buy up to an additional $15,000 worth of new securities free from transaction or brokerage costs. The share purchase plan will raise up to a further $200 million.
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At the time of publishing, Luke has no financial interest in any companies mentioned.
