Atlas Arteria · ASX:ALX
Atlas Arteria — H1 2018 Earnings Presentation
39 slides from Atlas Arteria's earnings presentation, Aug 30, 2018
Slide 1: 2018 Half Year Results Presentation
Atlas Arteria 2018 Half Year Results Presentation 30 August 2018
Slide 2: Important notice and disclaimer
Important notice and disclaimer Disclaimer Atlas Arteria (ALX) comprises Atlas Arteria Limited (ACN 141 075 201) (ATLAX) and Atlas Arteria International Limited (Registration No. 43828) (ATLIX). Macquarie Fund Advisers Pty Limited (ACN 127 735 960) (AFSL 318 123) (MFA) is the manager/adviser of ATLA
Slide 3: Important notice and disclaimer
Important notice and disclaimer Japan These materials have been prepared solely for qualified institutional investors in Japan as defined under the Financial Instruments and Exchange Act of Japan (FIEA). They do not constitute an offer of securities for sale in Japan and no registration statement ha
Slide 4: Contents
Contents 01 Overview Insert divider title 3 01 James divider A Insert Hooke, title 5 7 Chief Executive Officer Financial Performance 02 Mark Goodrick, 11 Chief Financial Officer Asset Review 03 James Hooke, 15 Chief Executive Officer Internalisation Update 04 Graeme Bevans, 33 Chief Executive Office
Slide 5: Overview
01 Overview James Hooke, Chief Executive Officer
Slide 6: 1H18 snapshot
1H18 snapshot ALX’s portfolio continued to deliver positive growth in 1H18 ▲3.4% Traffic ▲5.6% Revenue ▲6.2% EBITDA 1H18 highlights • Positive asset performance: continued growth in weighted average traffic, revenue and EBITDA across the portfolio • Ongoing focus on interest savings across ALX’s por
Slide 7: Traffic performance
Traffic performance Strong traffic growth in European assets, partially offset by weaker performance at Greenway • Weighted average traffic across the portfolio grew by 3.4%, underpinned by strong European asset performance attributable to favourable economic conditions • The portfolio benefitted fr
Slide 8: Business focus
Business focus Asset management initiatives Capital structure optimisation • Key capital project planning continues to progress at • Continued review and optimisation of the group and APRR and Greenway: individual asset capital structures to enhance the ̶ 2017 State Capex Plan continues to be review
Slide 9: Capital structure optimisation
Capital structure optimisation Ongoing focus on optimising capital structure on a portfolio and individual asset basis • Portfolio currently moderately geared at Net Debt / EBITDA1 of 6.3x (1H17: 6.7x) with a EBITDA / Interest2 coverage ratio of 3.4x • Average cost of debt for the portfolio during 1
Slide 10: ALX distributions
ALX distributions 2H18 distribution guidance of 12.0 cps confirmed1 ALX distributions (cps) • Expected to declare during September 2018 with payment in early October 1H 2H Guidance • Underpinned by APRR and subject to foreign exchange movements and future 30.0 events 12.0 2019 distribution guidance
Slide 11: Financial Performance
02 Financial Performance Mark Goodrick, Chief Financial Officer
Slide 12: Consolidated income statement
Consolidated income statement Statutory accounts 6 months ended 6 months ended 30 June 2018 30 June 2017 ALX Dulles ALX ALX A$m Corporate Greenway1 Total Total Total revenue and other income 0.3 59.3 59.6 408.92 3 Share of net profits of associates 127.5 - 127.5 81.7 4 Performance fees (70.6) - (70.
Slide 13: Consolidated balance sheet
Consolidated balance sheet Statutory accounts As at As at 30 June 2018 31 Dec 2017 ALX Dulles ALX ALX A$m Corporate Greenway1 Total Total Current assets 89.0 68.1 157.1 124.0 Investments in associates 1,548.3 - 1,548.3 1,483.3 Tolling concessions - 2,280.5 2,280.5 2,189.7 Goodwill - 62.0 62.0 58.7 O
Slide 14: ALX corporate cash flow summary
ALX corporate cash flow summary Available cash (A$m) 1H18 1H17 Opening balance – 1 January 39.8 223.4 1. Distributions from Financière Eiffarie (FE) of €64.3m in Distributions from APRR1 103.7 77.1 March 2018 (March 2017: €54.8m). Fees from M6 Toll and Warnow Tunnel2 - 5.2 2. Transfer of 100% ordina
Slide 15: Asset Review
03 Asset Review James Hooke, Chief Executive Officer
Slide 16: 1H18 asset performance
1H18 asset performance Strong European asset performance partially offset by weaker performance at Dulles Greenway APRR ADELAC • Revenue growth supported by • Overall performance benefitted 7.7% 6.8% traffic growth and an average from a combination of higher 4.6% ~2% toll increase in February 4.4% 4
Slide 17: APRR 1H18 results
APRR 1H18 results1 Light vehicles Heavy vehicles Traffic VKTbn VKTbn ▲4.6% 11.7bn VKT2 9.8 +4.3% 2.0 +6.3% 9.6 9.7 2.0 1.9 9.4 +2.5% +4.2% 9.3 9.2 +3.7% 1.8 1.8 +6.0% 9.0 9.1 1.8 Revenue +2.3% +2.0% ▲6.8% €1,234.7m 8.8 +1.9% 8.8 1.7 +2.2% 8.6 1.7 8.6 1.6 1.6 8.4 8.2 1.5 8.0 EBITDA ▲7.7% €939.0m 7.8
Slide 18: APRR Financial performance
APRR Financial performance Continued revenue growth with ongoing cost management 5 year financial performance (€m) 1H18 financial performance 75.4% 76.0% Revenue growth attributable to strong traffic growth, toll 74.9% 74.4% 1,400 increases and favourable traffic mix (relatively stronger heavy 71.
Slide 19: APRR French macroeconomic environment
APRR French macroeconomic environment APRR remains well positioned to benefit from further improvements in French economic activity Household disposable income and APRR light vehicle traffic1 Import, manufacturing and APRR heavy vehicle traffic1 120 130 115 120 110 110 105 100 100 95 90 90 80 2005 2
Slide 20: APRR Earnings stability
APRR Earnings stability Continued EBITDA growth recorded in 1H18, displaying strong resilience through economic cycles APRR EBITDA1 and France GDP2 growth €m €1,800m 6.0% 1,775 €1,600m 1,685 1,589 4.0% 1,520 €1,400m 1,475 1,399 1,428 1,326 €1,200m 1,244 1,265 2.0% 1,208 €1,000m 1,068 974 0.0% 924 94
Slide 21: APRR Financing costs
APRR Financing costs Opportunity for ongoing APRR Group debt cost saving continues. Expiry of the legacy swaps at Eiffarie are anticipated to provide significant future interest savings APRR APRR / Eiffarie cost of debt6 APRR 1H18 net interest expense decreased €14m1 compared to 1H17 Commercial We
Slide 22: APRR Debt profile
APRR Debt profile Sustainable debt maturity profile with strong liquidity position APRR is investment grade credit rated A- Stable Outlook by both S&P and Fitch APRR Group Net Debt balance of €8.3bn1 as at 30 June 2018; representing 4.5x Net Debt / EBITDA As at 30 June 2018, the APRR Group has
Slide 23: APRR Capital projects
APRR Capital projects Continued investment into growing and improving the existing network Ongoing opportunities within the APRR footprint 50km of the APRR network added since 2015 APRR continues to grow and improve its existing network, with ongoing FRANCE investment via: ̶ 2014-2018 Management C
Slide 24: ADELAC 1H18 results
ADELAC 1H18 results1 Financial performance (€m) vs traffic (ADT) • Performance continued Traffic to benefit from favourable ▲2.3% 29,961 ADT2 French and Swiss economic 35 29,961 29,283 environment 28,439 30,000 27,142 26,042 30 26.8 28.0 25.3 25,000 23.3 4.7 4.6 25 21.8 4.9 4.5 • Revenue growth driv
Slide 25: Dulles Greenway 1H18 results
Dulles Greenway 1H18 results1 Workday traffic performance Non-Workday traffic performance Traffic ADT (’000s) ADT (‘000s) ▼5.8% 50,271 ADT2 65.0 +6.9% +0.4% 34.0 +3.4% 62.0 62.3 +2.3% 33.0 60.0 +4.3% -6.0% 32.0 -5.3% +4.3% 31.9 +1.3% 58.6 31.3 58.0 +4.2% 31.2 55.0 30.0 55.6 29.9 50.0 28.0 Revenue ▼3
Slide 26: Dulles Greenway Performance
Dulles Greenway Performance Overall performance was adversely impacted by traffic, partially offset by March 2018 toll increases Financial performance (US$m)1 vs traffic (ADT) Traffic continued to be adversely impacted by upgrades on competing routes in the corridor as well as weather events 52,77
Slide 27: Dulles Greenway Corridor dynamics
Dulles Greenway Corridor dynamics Local network developments have resulted in continued traffic volatility on the Greenway Corridor update Improvements to competing routes and construction activities in the corridor continued to impact Greenway traffic during 1H18 Greenway will cycle through to
Slide 28: Dulles Greenway Asset management initiatives
Dulles Greenway Asset management initiatives Seeking to drive performance through addressing challenges faced by the Greenway Operating cost control Decongestion • Continue to focus on cost control and operating efficiency in • Eastern end (DTR Connector): approvals process continues order to improv
Slide 29: Dulles Greenway TRIP II debt profile
Dulles Greenway TRIP II debt profile Fixed-rate debt profile at TRIP II with no refinancing requirements for the duration of the concession As at 30 June 2018, US$1.0bn of total gross outstanding debt at TRIP with fixed amortisation profile until 2056 ̶ Bonds rated BBB- by S&P, Ba1 by Moody’s and
Slide 30: Dulles Greenway Distribution tests
Dulles Greenway Distribution tests 2H18 year on year traffic decline will need to improve vs 1H18 year on year traffic decline to ensure Greenway passes the three year lock-up test at the end of 2018 Through to 26 August 2018, 2H18 traffic decline against pcp has modestly improved relative to 1H18
Slide 31: Warnow 1H18 results
Warnow 1H18 results1 Financial performance (€m) vs traffic (ADT) • Traffic benefitted from Traffic temporary construction ▲8.4% 12,358 ADT2 works on competing 12,358 routes 7 11,397 11,097 12,000 10,828 10,536 6 5.9 5.2 10,000 5.0 5 4.7 1.3 4.4 • Revenue growth was 1.5 Revenue 8,000 1.5 driven by tr
Slide 32: Warnow Acquisition
Warnow Acquisition Moving to 100% ownership in Warnow enhances the ability for ALX to optimise the asset Acquisition overview Macroeconomic environment Warnow is a 2km toll road, including a 0.8km tunnel under the Germany has seen a continued economic recovery since Warnow River in the city of R
Slide 33: Internalisation Update
04 Internalisation Update Graeme Bevans, Chief Executive Officer Elect
Slide 34: Update on internalisation
Update on internalisation Following approval by ALX securityholders on 15 May 2018, ALX has commenced recruiting an internalised management team and establishing appropriate software, systems and processes • CEO Elect and CFO Elect have been appointed Recruitment • Active recruitment underway to est
Slide 35: Appendix
05 [Appencin
Slide 36: Cash flow: APRR to ALX securityholders
Cash flow: APRR to ALX securityholders Cash flow: APRR to ALX securityholders Eiffarie / Financière Eiffarie (FE) APRR dividend A add APRR tax instalments to FE B add Other1 C less Eiffarie interest / reserve D less FE tax payments / provisions E Distributable cash F=A+B+C–D–E less Debt repayment /
Slide 37: Cash flow: APRR to ALX securityholders
Cash flow: APRR to ALX securityholders Cash flow: APRR to ALX securityholders Eiffarie/Financière Eiffarie (€m) (100%) 1H16 2H16 1H17 2H17 1H18 APRR dividend 287 6401 326 365 400 add APRR tax instalments to FE 183 159 217 222 246 add Other2 0 (128)3 (7) 74 (0) less Eiffarie interest / reserve (86) (
Slide 38: ALX statutory accounts
ALX statutory accounts Statutory accounts for the half year ended 30 June 2018 Statutory accounting • ALX equity accounts all assets except Dulles Greenway, which is controlled and consolidated following the acquisition of the remaining 50% estimated economic interest in May 2017 Equity accounting •
Slide 39: Proportionately consolidated financial performance
Proportionately consolidated financial performance Actual Pro forma Actual A$m half year ended 30 Jun 18 half year ended 30 Jun 171 Change vs pcp half year ended 30 Jun 172 Proportionate revenue 559.9 530.0 5.6% 386.9 Proportionate operating expenses (130.8) (126.1) (3.7%) (92.0) Proportionate EBITD