Business Description:
Transurban Group (TCL) is involved in the development, operation, and maintenance of toll roads business in Australia and North America.

Strategy Analysis:
TCL's strategy is to diversify its portfolio of toll roads, drive operational efficiencies and upgrade roads as needed. The cost reduction program initiated in June 2008 is progressing well and further savings should negate inflation pressures and see costs remain flat over the medium-term. TCL´s portfolio has grown from a single road - CityLink in Melbourne - to a diversified portoflio over the last decade. In Australia, it acquired Hills Motorway in 2005, Sydney Roads Group in mid 2007 and the Lane Cove Tunnel in mid 2010. It entered the US market in 2006, securing a 99 year concession to operate the Pocahontas Parkway in Virginia. It subsequently secured two HOT lanes projects - a 75 year concession on the Washington Capital Beltway and a 73 year concession on the adjoining I-95. US expansion has disappointed so far but the HOT lanes projects currently under planning/construction should be more successful. The 50% owned Sydney Westlink M7 opened in late 2005 and continues to ramp-up. The Melbourne CityLink upgrade finished late 2010 and is driving strong traffic growth. Work on widening the Hills M2 begun January 2011, hurting traffic volumes on the M2 and the LCT and M7 which connect to it. The M5 upgrade should be next. Distributions are based on free cash flow without debt. Transurban Group released its financial results for the year ended 30 June 2011, reporting underlying proportional EBITDA of $718.7m, an increase of 13.1% on the prior corresponding period (pcp). On a statutory accounting basis, the group reported net profit of $118.2m, a 98.2% increase on the pcp. Continued strong revenue growth in the second half of the year and continued success with cost management led to underlying free cash increasing 12.3% to $390.4m, allowing the board to declare a final distribution of 14.0 cents per security. The declared full year distribution of 27.0 cents is an increase from guidance and represents 12.5% growth on the prior year.