Using FY17 information if FCF was 1,220M, interest paid is 652M and dividend 801M, TOTAL -228m.
You’re double-counting the Interest expense. If you look at slide 53 of the FY2017 Results Presentation, you can see that the 1,220m A$ Free Cash amount (bottom line) is obtained after accounting for the Proportional Net Finance Costs paid (second line from the top).
Therefore, the Free Cash Flow, calculated on a proportional basis, comfortably exceeds the dividend amount, after interest is factored in.
When I talk about rolling the debt, what I mean is that the average maturity of Transurban’s debt does not match the average life of the concessions; therefore, debt needs to be periodically rolled (refinanced). My point is that, if there were no timing mismatch, and no new concessions were added, then the Company would not need to add any new debt to support its dividend payments.
TCL Price at posting:
$12.38 Sentiment: Buy Disclosure: Held
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