Atlas Arteria · ASX:ALX
Atlas Arteria — Macquarie Atlas Roads — FY2014 Earnings Presentation
40 slides from Atlas Arteria's earnings presentation, Feb 26, 2015
Slide 1: Macquarie Atlas Roads 2014 FY Results Presentation
Macquarie Atlas Roads 2014 FY Results Presentation 26 February 2015
Slide 2: Important notice and disclaimer
Important notice and disclaimer Disclaimer Macquarie Atlas Roads (MQA) comprises Macquarie Atlas Roads Limited (ACN 141 075 201) (MARL) and Macquarie Atlas Roads International Limited (Registration No. 43828) (MARIL). Macquarie Fund Advisers Pty Limited (ACN 127 735 960) (AFSL 318 123) (MFA) is the
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 h
Slide 4: Table of Contents
Table of Contents Overview 01 4 Peter Trent, Chief Executive Officer Financial Performance 02 7 Mary Nicholson, Chief Financial Officer Asset Review 03 12 Peter Trent, Chief Executive Officer 04 Questions 29 MACQUARIE ATLAS ROADS PAGE 3
Slide 5: Overview
1 Overview Peter Trent Chief Executive Officer MACQUARIE ATLAS ROADS
Slide 6: 2014 snapshot
2014 snapshot Growth in portfolio traffic, revenue and EBITDA levels Traffic1 Revenue1 EBITDA1 +1.7% +2.6% +3.3% 2014 Statutory results summary Loss from continuing operations: A$50.6m (2013: A$41.9m profit) 2014 Portfolio highlights Traffic, revenue, EBITDA increasing on 2013 levels across all
Slide 7: 2014 segmented results
2014 segmented results Positive traffic, revenue and earnings growth recorded across all assets Continued pleasing performance by APRR despite weak French economy Strong Dulles Greenway performance reflects continued growth in the traffic corridor 7.1% 5.3% 5.2% 5.3% 3.0% 3.0% 2.4% 1.6% 1.7% 1.0
Slide 8: Financial Performance
2 Financial Performance Mary Nicholson Chief Financial Officer MACQUARIE ATLAS ROADS
Slide 9: Consolidated profit & loss account
Consolidated profit & loss account Statutory accounts – year ended 31 December 2014 Year ended Year ended Revenue includes M6 Toll management A$m 31 Dec 14 31 Dec 13 fee income (annual fee of £750,000 Revenue 2.1 0.9 indexed, paid in July and January) and interest income Performance fees (58.2) -
Slide 10: Consolidated balance sheet
Consolidated balance sheet Statutory accounts – as at 31 December 2014 As at As at Investments in associates includes APRR A$m 31 Dec 14 31 Dec 13 and Dulles Greenway accounted for Current assets 31.0 17.8 using the equity method Investments in associates 835.4 862.7 Current liabilities includes
Slide 11: MQA cash flow summary
MQA cash flow summary Year to Year to Distributions from Financière Eiffarie of Available cash (A$m) 31 Dec 14 31 Dec 13 €25.6m in March 2014 and €40.0m in Opening balance – 1 January 17.7 13.7 September 2014 Distributions from APRR 96.6 48.8 M6 Toll management fee 0.8 - Reduction in management
Slide 12: MQA distributions
MQA distributions 1H 2015 distribution guidance of 6.0 cps Subject to foreign exchange movements (FX) and unforeseen events Expect to declare mid March and pay end March Wholly from MARIL, anticipated to include foreign dividend and capital return components1 Distribution reconciliation A$m Ma
Slide 13: Asset Review
3 Asset Review Peter Trent Chief Executive Officer MACQUARIE ATLAS ROADS
Slide 14: APRR – 2014 results
APRR – 2014 results Traffic Revenue EBITDA1 +1.6% +2.4% +3.0% 21.7bn VKT €2,149.2m €1,520.3m Positive performance Supported by Benefited from despite challenging increases in tolls in continued revenue economic February 2014 of growth and opex environment 0.80% for APRR and control 0.84% for A
Slide 15: APRR traffic analysis
APRR traffic analysis Increased traffic volumes across light and heavy vehicles against pcp Light vehicle and heavy vehicle represent ~85% and ~15% of total traffic respectively LV Traffic +1.6% HV Traffic +1.5% Total VKT +1.6% 2012 2013 2014 2,000 2012 2013 2014 2012 2013 2014 10,000 12,000 11,50
Slide 16: APRR performance
APRR performance Growth maintained through economic cycles APRR EBITDA (€m)1 and France GDP growth (%)2 €1,750m 3.0% 1,520 €1,500m 1,428 1,475 2.0% 1,399 1,326 1,244 1,265 €1,250m 1,208 1.0% €1,000m 0.0% €750m (1.0%) €500m 1,068 (2.0%) 888 924 9413 974 841 €250m (3.0%) €0m (4.0%) 2001 2002 2003 2004
Slide 17: APRR profit
APRR profit EBITDA growth and interest savings for 2014 are offset by higher provision and income tax €550m 14 €500m 41 50 12 17 61 2 €450m 8 26 16 45 442 56 420 €400m 392 D&A, provisions, other1 D&A, provisions, other Operating taxes Operating taxes Net profit 2012 Net profit 2013 Net profit 2014 €
Slide 18: APRR/Eiffarie – refinancing completed
APRR/Eiffarie – refinancing completed €3.3bn refinancing plan successfully completed for APRR/Eiffarie Eiffarie has secured a €1.5bn five-year term loan with two extensions of one year each Proceeds of the new loan, together with a ~€1.0bn dividend from APRR, have been applied to repay existing
Slide 19: APRR/Eiffarie debt maturity profile
APRR/Eiffarie debt maturity profile Strong liquidity position with financing costs expected to continue to reduce Eiffarie term loan facility successfully refinanced with an initial five year term plus two one year extensions Pro Forma APRR/Eiffarie Debt Maturity Profile (€m)1 2,500 4,000 3,906 As
Slide 20: APRR bond issues
APRR bond issues APRR issued €2.4bn bonds during 2014 €500m at 2.25% due 2020 €700m at 1.125% due 2021 €500m FRN at Euribor+75bps due 2019 €700m at 1.875% due 2025 S&P upgraded APRR’s credit rating to BBB+ (stable outlook) in November 2014 APRR Bonds: Mid-Yield to maturity1 6.0% 5.0% 4.0%
Slide 21: APRR/Eiffarie – political issues overview
APRR/Eiffarie – political issues overview Background for recent events • In September 2014, the French competition authority released a report which raised concerns regarding the profitability of French motorways. The report subsequently led to negative media and political attention • An escalation
Slide 22: APRR/Eiffarie – political issues (cont'd)
APRR/Eiffarie – political issues (cont’d) APRR/AREA continue to work with the French State and are optimistic that a mutually acceptable outcome will be reached APRR’s concession contract offers strong protection mechanisms: – Contract can be amended only through mutual agreement – Any change to t
Slide 23: APRR/Eiffarie – looking forward
APRR/Eiffarie – looking forward Other Temporary increase in corporate tax rate from ~36% to ~38% to continue into 2015 Continued focus on control of operating costs and reduction in financing costs Anticipated receipt from Financière Eiffarie of: – ~€28.6m in March 2015 – ~€52-56m in September
Slide 24: Dulles Greenway – 2014 results
Dulles Greenway – 2014 results Traffic Revenue EBITDA +3.0% +5.3% +7.1% 48,443 ADT US$78.9m US$63.0m Strong performance Supported by the April EBITDA margin reflecting improving 2014 toll increases of increased to 79.8% economic conditions 4.1% (peak) and 2.4% (2013: 78.5%) and continued corri
Slide 25: Dulles Greenway – traffic analysis
Dulles Greenway – traffic analysis Positive traffic growth observed in 2013 continued into 2014 Interconnection with the adjoining Dulles Toll Road (DTR) remains the prime traffic flow for the Dulles Greenway Quarterly Traffic Performance (ADT) Mainline Traffic Data (origin/destination) 52,000 2.0
Slide 26: Dulles Greenway – performance
Dulles Greenway – performance Revenue growth and effective cost control have led to strong growth in EBITDA Positive traffic growth and toll increases have led to a 5.3% increase in revenue Operating costs broadly flat Revenue/EBITDA (US$m) vs Traffic (ADT) US$m ADT 90 50,000 78.9 80 72.4 74.9 6
Slide 27: Dulles Greenway – other developments
Dulles Greenway – other developments Distribution outlook No distributions expected before 2019 State Corporation Commission (SCC) hearings The Greenway has undergone an extensive regulatory hearing process with the SCC during 2013 and 2014 with respect to the current toll rate structure. The SC
Slide 28: Other assets – 2014 results
Other assets – 2014 results Assets Traffic Revenue EBITDA Comments Chicago Traffic was relatively flat with revenue benefiting from a Skyway favourable traffic mix. +0.2% +1.0% +0.7% Traffic benefited from intermittent construction disruptions Warnow on alternate routes and a milder winter. Revenue
Slide 29: Other
Other Indiana Toll Road update ITR filed a pre-packaged Chapter 11 plan on 22 September 2014, which allowed the commencement of a sale transaction Indicative bids were submitted in late 2014 – Bidders are currently undertaking due diligence – Completion of a sale transaction is anticipated durin
Slide 30: Questions
4 Questions MACQUARIE ATLAS ROADS
Slide 31: Appendix
A Appendix MACQUARIE ATLAS ROADS
Slide 32: Cash flow: APRR to MQA shareholders
Cash flow: APRR to MQA shareholders Cash flow: APRR to MQA shareholders Eiffarie/Financière Eiffarie (€m) 1H 2013 2H 2013 1H 2014 2H 2014 APRR dividend 188 213 241 209 add APRR tax instalments to FE 125 120 196 147 add Other1 (23) 5 (2) (1) less Eiffarie net interest (101) (123) (118) (120) less FE
Slide 33: APRR free cash flow
APRR free cash flow Financière Eiffarie distributions, and therefore MQA distributions, reflect only a portion of APRR free cash flow APRR consistently generates cash flow in excess of net profit. The excess is used to fund capex and debt repayments at the APRR level 100% of APRR profit is distr
Slide 34: MQA free cash flow
MQA free cash flow Cash flow: APRR to MQA shareholders FY 2014 APRR free cash flow (€m) 821 Eiffarie net interest (€m) (238) Eiffarie/FE opex (€m) (1) Tax grouping (€m) 245 Consolidated free cash flow (€m) 827 MQA’s proportionate share in € (20.14%) (€m) 167 MQA’s proportionate share in A$ (20.14%)1
Slide 35: Eiffarie refinancing – cash flow considerations
Eiffarie refinancing – cash flow considerations Internal restructure Eiffarie Loan Repayment Profile In 2H 2014, APRR undertook an internal restructure, which Repayment Date Instalment (€) created a ~€1bn reserve at APRR. APRR paid a dividend from this reserve, which was applied to repay part of t
Slide 36: APRR traffic – light vehicles
APRR traffic – light vehicles Light vehicle traffic has outperformed GDP Contribution from growth of real household disposable income APRR Light vehicles and economic indicators1,2 110 105 100 95 90 85 80 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 LV Traffic GDP Disposable Income 1. Moving
Slide 37: APRR traffic – heavy vehicles
APRR traffic – heavy vehicles Heavy vehicles correlated to French manufacturing Foreign trade volumes an additional factor APRR Heavy vehicles and economic indicators1,2 110 100 90 80 70 60 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HV Traffic Imports Manufacturing 1. Moving 12 month averag
Slide 38: Dulles Greenway corridor
Dulles Greenway corridor Demographic factors expected to progressively increase congestion in corridor Dynamic Corridor (Population Growth p.a.%)1 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Loudoun County Fairfax Co./Fairfax Arlington County Washington D.C. city/Falls Chuch 2010-15 2015-20 2020-25 2025-30 2
Slide 39: MQA statutory accounts
MQA statutory accounts Statutory accounts for the year ended 2014 Statutory accounting MQA equity accounts all assets All assets are non-controlled assets Equity accounting Initially recognise assets at acquisition value1 P&L Account: recognise share of accounting profits/losses from associa
Slide 40: Proportionately consolidated financial performance
Proportionately consolidated financial performance Actual Pro Forma Actual Year ended Year ended Change vs Year ended A$m 31 Dec 14 31 Dec 131 pcp 31 Dec 132 Proportionate revenue 697.3 679.9 2.6% 682.9 Proportionate operating expenses (197.5) (195.9) (0.8%) (193.2) Proportionate EBITDA from road as