The Transurban Group (ASX: TCL) share price won't be going anywhere on Wednesday after the toll road operator released its full year results and then requested a trading halt this morning.
How did Transurban perform in FY 2019?
In FY 2019 Transurban posted a 26.3% increase in revenue from ordinary activities to $4,166 million and a 10.3% lift in toll revenue to $2,581 million. Average daily traffic (ADT) grew by 2% over the 12 months.
Profit from ordinary activities after tax decreased 63.7% on the prior corresponding period to $170 million and profit from ordinary activities after tax excluding significant items decreased 46.8% to $260 million.
Management's preferred primary measure of its performance is proportional EBITDA excluding significant items. This is because it "reflects the contribution from individual assets to Transurban's operating performance and permits a meaningful analysis of the performance of the Group's assets."
Proportional EBITDA excluding significant items increased 12.3% to $2,016 million during FY 2019. Free cash increased 25.7% to $1,527 million.
In light of this positive performance and management's confidence in its outlook, the company has provided FY 2020 distribution guidance of 62 cents per security. This represents growth of 5.1% over FY 2019's distribution.
Transurban Chief Executive Officer, Scott Charlton, said: "Our continued focus on delivery and execution has seen the opening of new capacity on four major projects over the year, delivering valuable travel-time savings for customers. The community response to the opening of the New M4 Tunnels has been particularly positive with early traffic performance currently ahead of our investment case in the first three weeks of opening."
Trading halt.
Transurban requested a trading halt this morning so that it can undertake a $700 million equity raising to fund the purchase of the remaining 34.62% minority interests in M5 West for $468 million.
Management expects the transaction to be immediately free cash flow and value accretive. It expects it to be free cash flow accretive by approximately 3 cents per security in FY 2020 inclusive of the equity raising. This will strengthen its distribution free cash coverage.
Transurban intends to raise $500 million (1.3% of total securities outstanding) via a fully underwritten pro rata institutional placement at an offer price of $14.70 per security. This represents a 3.48% discount to Transurban's closing price of $15.23 on August 6.
In addition to this, the company revealed that a non-underwritten security purchase plan (SPP) will also be in place for eligible security holders to raise up to $200 million.
Under the SPP, eligible security holders will be invited to subscribe for up to $15,000 of new securities per security holder, free of transaction and brokerage costs.
New securities under the SPP will be issued at the lower of the placement price and a 2% discount to the 5-day VWAP of Transurban securities up to the SPP closing date.
