They just like our roads, says Transurban chair

TRANSURBAN chairman Lindsay Maxsted says the company’s tollways offer motorists value for money and its string of bumper profits simply shows “people like travelling on our roads”.

Mr Maxsted says motorists are more concerned about whether Transurban’s toll roads save them time and offer good value rather than the fact the company is churning out a steady stream of super-sized earnings.

Transurban’s underlying earnings before interest, tax, depreciation and amortisation — its preferred profit measure — have doubled to more than $1.6 billion over the four years to June.

The underlying measure strips out one-offs, such as asset writedowns, giving what the company says is a clearer picture of its ongoing health.

Mr Maxsted defended the bottom line and toll pricing, saying motorists were concerned “not so much with our underlying EBITDA but the cost of travelling on our roads”.

“That all then comes back down to, ‘can we demonstrate to the road user that it’s a safer journey, it’s a quicker journey, it’s a more efficient journey, it gets them to places on time’,” Mr Maxsted said.

“As long as we can do that then the proof is in the eating of the pudding — people like travelling on our roads.”

Bigger profit levels also reflected the fact Transurban was a much larger company, Mr Maxsted said. His comments came as Transurban revealed toll revenue jumped 10.5 per cent to $567 million for

Motorists are concerned not so much with our underlying EBITDA but the cost of travelling on our roads ... people like travelling on our roads Transurban chairman Lindsay Maxsted

the three months to September compared with the same period a year earlier.

Revenue from CityLink climbed 13.4 per cent to $192 million — despite the number of trips falling by 2.3 per cent — meaning Melbourne motorists are coughing up more than $2 million a day to use the road.

Mr Maxsted, who also chairs Westpac and sits on the BHP board, was speaking after hosting Transurban’s annual meeting in Melbourne.

The company’s remuneration report came under fire from the Australian Shareholders’ Association for using the “fair-value” method of calculating the number of shares awarded to executives under long-term incentive programs.

The fair-value method discounts the share price to account for foregone dividends and long-term price volatility.

It means executives are awarded more shares than they would be if their allocation was calculated on the current share price, the socalled “face-value” method.

ASA company representative Daniel Grioli said most ASX 100 companies now used the face-value method.

“Face-value is more transparent … it doesn’t insulate the bonus from potential changes in the stock price which may potentially advantage those receiving the bonus,” Mr Grioli told the meeting.

Mr Maxsted defended the fair-value method, saying it was right to take into account “the vagaries of the market” when determining allocations for executives. “We think it best reflects the external environment,” he said.