Transurban Group Financial Report Analysis: 2018 Performance

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ACCOUNTING CONCEPTS AND
PRACTICES
QUESTION 1 - TRANSURBAN GROUP

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TABLE OF CONTENTS
INTRODUCTION........................................................................................................................3
ANALYSIS.................................................................................................................................. 4
INCOME ANALYSIS................................................................................................................4
OPERATIONS AND FINANCIALS.............................................................................................5
FINANCING ACTIVITIES.........................................................................................................5
OTHER INFORMATION REQUIRED TO MAKE ASSESSMENT OF TRANSURBAN......................6
CONCLUSION............................................................................................................................7
REFERENCES............................................................................................................................. 8

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INTRODUCTION
Transurban Group is an organization which is engaged in the development, operations,
management and the financials of the urban toll road networks. The company was
established in Australia (About, 2019). This report is being prepared with the major
objective of analysing the financial reports of the organization so as to determine the level
of improvements in the profitability and the position of the organization.

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ANALYSIS
The operations of the Transurban group can be divided into four geographic segments
based on the operations of the toll roads. This includes the regions of North America along
with Sydney, Brisbane and Melbourne in Australia (About, 2019). The revenue contribution
from the operations of Sydney was maximum and accounted for 40.4% contribution in the
overall revenue. The operations experienced total revenue growth of 8.3% in the financial
year 2018 and an EBITDA growth of 9.1% (Annual Report, 2018). This strong growth of the
Sydney segment can be attributed to the increase in the toll revenues owing to the increase
in the road traffic for the particular time duration. It is also evident from the annual report
that the Melbourne segment accounted for 33.3%, Brisbane segment for 16.8% and the
North America segment by 9.5% respectively.
40.4%
33.3%
16.8%
9.5%
Sydney
Melbourne
Brisbane
North America
Figure 1 Revenue contribution by Segment
(Source: Annual Report, 2018)
The financial results of all the four geographic segments are being prepared and analyzed as
follows:
INCOME ANALYSIS
After the analysis of the income and loss statement, it is evident that the profits of the
company have increased tremendously with 134.3% in the financial year 2018 as compared

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to 2017 and accounted for USD 468 million (Annual Report, 2018). The total revenues which
were generated by the company from the toll have also depicted an increase of 8% and
have reached to USD 2249 million (Annual Report, 2018). The income statement of the
organization has also depicted an increase in the net profit which is attributable to the
shareholders by 102.5% (Annual Report, 2018). This increase in the overall revenues of the
organization can be attributed to the increase in the toll revenues for the company by the
deployment of existing assets which is a result of the escalation in the prices of toll and also
the growth in the traffic. The increase in the profits after tax can also be attributed to the
increase in the income tax benefit which was gained by recording the unrecorded tax losses
as a result of the US operations. Owing to the strong revenues in the financial year 2018, the
organization has aimed to provide its shareholders with an increase of approximately 100
percent in the free cash flows over the financial year 2019 by means of its distribution
strategies (Annual Report, 2018).
OPERATIONS AND FINANCIALS
In the financial year 2018, the company has acquired the A25 toll bridge and road in Canada
and also the retail tolling linkt was launched in three areas comprising up of Melbourne,
Sydney and Brisbane. With the objective of accomplishing these acquisitions and expanding
the operations the firm had relied both on the debt and equity capital. The total of USD 1.9
million of equity was raised in the year 2018 by means of the entitlement offer (Annual
Report, 2018). The debt capital raised by the organization amounted to USD 4.8 billion on
the terms that the minimum amount of debt would be refinanced in the financial year 2019
(Annual Report, 2018). This ensured that the revenues generated from the project in the
long term could be used efficiently for repaying the debts. The organization has also focused
on reducing and improvising the fee structure for all Australian customers. The firm had also
made investments in the completion of the CTW project which was operating in Melbourne
for facilitating savings in the overall travel time to the customers.
FINANCING ACTIVITIES
In the financial year 2018, Transurban group has completed several financial activities,
which have a significant impact on the profitability and the financial statements of the
organization. The Queensland operation has raised a total debt amounting to USD 954
million from the debt facility of the new bank. This debt was raised with a tender of 18

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months (Annual Report, 2018). The ten year USD Reg S debt was also priced by the
organization at an amount of USD 500 million under the Euro Medium term program
(Annual Report, 2018). Also, the firm had successfully raised a non-recourse debt amounting
to USD 226 million with the help of the debt facility of a new bank with four years tender
(AXS release, 2018). However, it is also evident that despite all these major financial
decisions and activities undertaken by the bank there were no changes in the ratings which
were provided to the company from the Moody’s investor services Inc. or the Fitch Ratings
Inc.
OTHER INFORMATION REQUIRED TO MAKE ASSESSMENT OF TRANSURBAN
The assessment of the Transurban group will be beneficial in the evaluation of the
performance of the activities undertaken by the organization. The assessment of the
organization is essential to determine the competitiveness of the organization within the
industry, in determining the corporate weakness and strengths of the organization and also
determining the threats and opportunities which would be an impact of the external
environment of the organization (Furnham and Gunter, 2015). The other relevant
information which can be used for making an assessment of the Transurban group could be
the auditor's report, the sustainability report and the other reports and information which
could have an impact on the decision making processes of the stakeholders. The internal
and the external analysis of the factors which have an impact on the operations of the
organization should also be analyzed by using various tools such as SWOT analysis and
PESTLE analysis (Maas et al., 2016). This would further be helpful in accessing the future
position of the operations of the organization in the forecasted years.

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CONCLUSION
From the analysis of the financial statements, comprising up of the income statement, the
balance sheet and the cash flow statement, it can be concluded that the Transurban group
has been successful in increasing the overall revenues in the financial year 2018. This could
be attributed to the strong investment strategies adopted by the organization. Also, the firm
is successful in raising the funds by means of debt and equity in a proportionate manner by
weighing the advantages and disadvantages of both, which has been further helpful in
ensuring reduced liabilities and increased profits in the long run.

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REFERENCES
About. 2019. Transurban Limited. [Online] Available At:
https://www.transurban.com/about-us
Annual Report. 2018. Transurban. [Online] Available At:
https://www.transurban.com/content/dam/investor-centre/04/2018-Annual-Report.pdf
AXS release. 2018. Financial Close of the Eastern Distributor Motorway (M1) Refinancing.
[Online] Available At:
http://member.afraccess.com/media?id=CMN://3A493249&filename=20180514/
TCL_01981204.pdf
Furnham, A. and Gunter, B., 2015. Corporate Assessment (Routledge Revivals): Auditing a
Company's Personality. Routledge.
Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability
assessment, management accounting, control, and reporting. Journal of Cleaner Production,
136, pp.237-248.