Atlas Arteria · ASX:ALX
Atlas Arteria — Macquarie Atlas Roads — FY2011 Earnings Presentation
48 slides from Atlas Arteria's earnings presentation, February 2012
Slide 1: Macquarie Atlas Roads Full Year Results Presentation
MACQUARIE ATLAS ROADS FULL YEAR RESULTS PRESENTATION 31 DECEMBER 2011
Slide 2: Disclaimer
Disclaimer Di l i 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 manager/advise
Slide 3: Disclaimer
Disclaimer H Hong K Kong This document has been prepared and intended to be disposed solely to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong for the purpose of providing preliminary information and does not constitute any offer to the pub
Slide 4: Presentation agenda
Presentation agenda 1. Overview 5 2. Financial Performance 9 3. Asset Review 15 4. Dividend Framework 26 5. Outlook 29 6. Questions 31 7. Appendices 32 4
Slide 5: 1. Overview
1. Overview Peter Trent, Trent Chief Executive Officer
Slide 6: 2011 snapshot
2011 snapshot Solid portfolio EBITDA performance achieved in difficult economic conditions Statutory results summary 2011 Portfolio results 2011 Revenue: A$91.9m (2010: A$103.1m) 2011 Loss after income tax : A$289.5m (2010: A$226.9m loss) P tf li hi Portfolio highlights hli ht 4 0% 4.0% APRR d
Slide 7: 2011 segmented results
2011 segmented results APRR, MQA’s largest asset, continued to perform robustly both in traffic and EBITDA Despite weak traffic, EBITDA increased at all other assets except the M6 Toll — Growth in EBITDA supported by higher tolls and cost control 2011 Traffic growth 2011 EBITDA growth 13.0% 13.0
Slide 8: 2011 progress
2011 progress MQA continues to deliver to plan with disciplined approach Milestone Comments APRR/Eiffarie 9 Eiffarie ownership of APRR now 98.93%, expected to reach 100% during 2012 9 Build up of APRR’s liquidity position: €2.55bn bonds issued over last 14 months 9 Successful refinancing of Eiffarie
Slide 9: 2. Financial Performance
2. Financial Performance Mary Nicholson, Nicholson Chief Financial Officer
Slide 10: MQA statutory accounts
MQA statutory accounts Statutory accounting MQA consolidates the results and balances of its controlled asset (M6 Toll) MQA equity accounts its non-controlled assets (APRR, Dulles Greenway, Chicago Skyway, Indiana Toll Road, Warnow Tunnel) Equity q y accounting g Initially recognise assets at
Slide 11: Consolidated profit & loss account
Consolidated p profit & loss account Statutory accounts – 12 months ended 31 December 2011 Non- N MQA Total T t l MQA Total T t l MQA controlled 12m to Period to 31 (A$m) Corporate M6 Toll assets 31 Dec 2011 Dec 2010 Total revenue 1.1 90.8 - 91.9 103.1 Financing costs - (102.6) - (102.6) (95.6) Othe
Slide 12: Consolidated balance sheet
Consolidated balance sheet Statutory accounts – as at 31 December 2011 Non- N MQA controlled MQA Total MQA Total (A$m) Corporate M6 Toll assets 31 Dec 2011 31 Dec 2010 Current assets 26.9 37.1 - 64.0 75.4 Investments in associates - - 753.4 753.4 931.1 Property, plant and equipment - 742.2 - 742.2 7
Slide 13: Proportionally consolidated performance
Proportionally consolidated performance Actual A t l Pro forma P f Change Ch Actual A t l (A$m) 12m to 31 Dec 11 12m to 31 Dec 10 (%) 11m to 31 Dec 10 Operating revenue 712.2 691.6 3.0% 709.1 Operating expenses (193.8) (193.0) 0.4% (195.7) EBITDA from road assets 518.4 498.6 4.0% 513.4 Asset mainten
Slide 14: MQA cash flow summary
MQA cash flow summary Available cash A$m Unlikely to receive any material income until 2013 Opening balance – 1 January 2011 19.1 Distribution from M6 Toll 13.7 — Small distribution may be received from Eiffarie during 2H 2012 subject to a number of Cash inflow from assets 13.7 conditions Interest
Slide 15: 3. Asset Review
3. Asset Review Peter Trent, Trent Chief Executive Officer
Slide 16: 2011 results: APRR
2011 results: APRR Another positive performance despite economic slowdown EBITDA Traffic Revenue 5.5% 1 6% 1.6% 4.2% VKT 21 21,500m 500m €2,021.6m €2 021 6m €1 398 6m1 €1,398.6m 1. Represents APRR EBITDA on a standalone basis. Consolidated APRR/Eiffarie EBITDA was €1,395.6m (5.7% growth on pcp) 16
Slide 17: APRR traffic analysis
APRR traffic analysis LV grew 1.4% in 2011 from 2010 HV grew 2.9% in 2011 from 2010 LV in 2010 reflected a number of positive and Recovery in HV flattening over 2011 reflecting negative one-off effects: a slow-down in economic activity – H Heavy snow iin 1Q 2010 and d 4Q 2010 4Q 2011 iin addit
Slide 18: Macroeconomic indicators
Macroeconomic indicators Leading indicators suggest some underlying improvement ahead French business & consumer confidence EC composite PMI output 120.0 65.0 110.0 60.0 55.0 100.0 50.0 90.0 45.0 80.0 40.0 70.0 Business Confidence 35.0 Consumer Confidence 60.0 30.0 30 0 01-Jan-11 01-May-11 01-Sep-
Slide 19: APRR operational efficiencies
APRR operational efficiencies Total T t l costs t increased i d11.5% 5% iin 2011 h however EBITDA margin continues to improve Operating Expenses (€m) Taxes and duties increased 10% reflecting 69.2% EBITDA Margin increases in TAT and CET 650 68 4% 68.4% 68.0% — TAT increased due mainly to higher tr
Slide 20: Eiffarie/APRR refinancing plan completed
Eiffarie/APRR refinancing plan completed 9 Minority acquisition — Eiffarie ownership now at 98.93% — Court decision on squeeze-out expected during 2012 9 Financial advisor appointed 9 Liquidity build up at APRR — Total debt issuance of €2.55bn bonds over last 14 months 9 Eiffarie debt reduction from
Slide 21: Eiffarie/APRR new debt package
Eiffarie/APRR new debt package Successful outcome achieved against challenging backdrop Total of €3.5bn bank facilities secured to replace debt at Eiffarie and the revolving credit facility at APRR Cash sweep profile favourable to distributions from Eiffarie in early years Completion of the re
Slide 22: 2011 results: Dulles Greenway
2011 results: Dulles Greenway EBITDA growth supported by cost reductions and modest revenue growth 2.6% Revenue EBITDA Traffic 2.6% 9.2% ADT 46,427 US$67.0m US$52.1m1 1. Includes non-recurring legal expenses of ~US$0.7m related to settlement of Autostrade’s O&M contract 22
Slide 23: Dulles Greenway traffic analysis
Dulles Greenway traffic analysis Annual traffic growth (2009-2011) Quarterly traffic growth 2011 Traffic decline reflecting significant toll 1Q 2011 comparison benefitting from heavy increases and adverse economic climate pcp snow in the p p +2.6% 2.0% +1.8% +13.0% Toll revenue increase 1.0% -%
Slide 24: Dulles Greenway initiatives
Dulles Greenway initiatives Internalised operations & maintenance delivered ~US$3m of annualised savings First full year of internalised operations & maintenance (commenced in May 2010) Total opex includes non-recurring non recurring legal expenses of US$0.7m — In addition a non-recurring expens
Slide 25: 2011 results: other assets
2011 results: other assets Assets Results C Comments Traffic Revenue EBITDA (10.2%) (7.0%) (8.3%) Traffic impacted by improvements on competing route, weak economic M6 Toll conditions and decline in real purchasing power (2.8%) 7.2% 9.0% ITR Traffic remained weak reflecting construction on ITR’s bar
Slide 26: 4. Dividend Framework
4. Dividend Framework
Slide 27: Dividend framework
Dividend framework Based on current outlook, dividends from MQA are anticipated to commence in 2013 MQA will pass through Eiffarie distributions after addressing corporate requirements: — Meeting corporate expenses (including base and any performance fees paid in cash) — Maintaining a prudent capi
Slide 28: Dividend considerations
Dividend considerations Dividends from MQA are subject to a number of factors APRR operating performance APRR’s credit rating g Satisfaction of debt covenants at APRR and distribution tests at Eiffarie Exchange rates: AUD/EUR Meeting corporate costs and retaining appropriate capital reserv
Slide 29: 5. Outlook
Hill i HI HH HII HH} 5. Outlook
Slide 30: 2012 Outlook
2012 Outlook APRR/Eiffarie 1Q traffic expected to be weak but improving for 2012 based on leading indicators Toll T ll iincrease iin F February b 2012 tto b benefit fit revenue Remainder portfolio assets Improving traffic performance for US roads generally UK traffic conditions expected to r
Slide 31: 6. Questions
HH HII HII 6. Questions
Slide 32: 7. Appendices
HH HII HII 7. Appendices
Slide 33: Statutory accounts vs Management Information Report (MIR)
Statutory accounts vs Management Information Report (MIR) Statutory result for the period Proportionally consolidated financial performance M6 Toll results consolidated. Non-controlled toll road asset Aggregation of operating results of proportionate interests in results included in share of losses
Slide 34: Statutory accounts vs MIR (cont'd)
Statutory accounts vs MIR (cont’d) Statutory cash flow statement Aggregated cash flow statement MQA owns 100% of the M6 Toll and consequently The cash flows and closing cash balance presented in the MIR consolidates the road operator company group cash flows excludes those balances of the road opera
Slide 35: Reconciliation – statutory results to proportionate earnings
Reconciliation – statutory results to proportionate earnings 12 months ended 2 Feb to 31 Dec 2011 31 Dec 2010 A$m A$m Loss attributable to MQA security holders (289.5) (142.5) M6 Toll related adjustments: Less: Non-cash financing costs 47.9 43.1 Less: Depreciation and amortisation net of maintenance
Slide 36: Reconciliation – statutory to MIR operating cash flows
Reconciliation – statutory to MIR operating cash flows 2 Feb 12 months ended to 31 Dec 2011 31 Dec 2010 A$m A$m Net statutory operating cash flows 44.9 67.0 M6 Toll related adjustments: Less: Toll revenue received (105.4) (112.5) Less: Interest and other income received (4 1) (4.1) (4 5) (4.5) Add:
Slide 37: Reconciliation – statutory to MIR closing cash balance
Reconciliation – statutory to MIR closing cash balance 31 Dec 2011 31 Dec 2010 A$m A$m Statutory closing cash balance 56.1 66.0 Less: M6 Toll closing cash balance (35 8) (35.8) (42 9) (42.9) Closing cash balance per MIR 20.3 23.1 37
Slide 38: Traffic and revenue performance
Traffic and revenue performance Change Quarter vs. pcp Asset 2011 2010 vs. pcp Mar 11 Jun 11 Sep 11 Dec 11 APRR Light Vehicle VKT (m) 18,203 17,953 1.4% Heavy Vehicle VKT (m) 3,297 3,203 2.9% Total VKT (m) 21,500 21,157 1.6% 4.1% (0.8%) 0.7% 3.2% T ll Revenue Toll R (€ (€m)) 1 961 1,961 1 882 1,882
Slide 39: Traffic and revenue performance (cont'd)
Traffic and revenue performance (cont d) (cont’d) Change Quarter vs. pcp Asset 2011 2010 vs. pcp Mar 11 Jun 11 Sep 11 Dec 11 Chicago Skyway Av Workday Traffic 40 647 40,647 43 476 43,476 (6 5%) (6.5%) Av Non-workday Traffic 45,152 48,312 (6.5%) Av All day Traffic 42,066 44,987 (6.5%) (6.5%) (5.5%) (
Slide 40: Proportionate earnings – by asset
Proportionate earnings – by asset A t lP Actual ti t E Proportionate i Earnings lit b split by assett ffor th th ended the 12 months d d 31 D b 2011 December Dulles Chicago Warnow APRR1 Greenw ay M6 Toll Skyw ay ITR Tunnel Total A$m A$m A$m A$m A$m A$m A$m Operating revenue 521 3 521.3 32 4 32.4 90
Slide 41: Debt maturity profile of assets
Debt maturity profile of assets Debt maturity profile of assets Year (as at 31 December 2011)1 Currency 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021+ APRR/Eiffarie €m 529.8 4,101.5 1,115.3 1,331.1 927.7 1,391.0 714.0 504.2 4.4 188.0 Dulles Greenway y US$m 47.3 47.6 48.0 48.3 46.0 43.4 39.9 31.9
Slide 42: Asset debt metrics
Asset debt metrics D bt metrics Debt ti C Currency N tD Net bt Debt N tD Net bt / Debt EBITDA/I t t EBITDA/Interest DSCR L kU Lock-Up 2011 H d i Hedging (as at 31 Dec 2011)1 (Local m) EBITDA (x) (x) (x) (x) (%) APRR/Eiffarie2 € 9,841.2 7.06x 3.85x 2.57x 1.25x 92.3% Dulles Greenway3 US$ 851.5 16.35x
Slide 43: Eiffarie loan facility: key terms
Eiffarie loan facility: key terms Item Terms Item Terms Total facility amount €2.765bn Interest 6 months Maturity February 2017 Period Margin 300bps Lock-Up Lock Up Group Net Debt/EBITDA <=7.94x 7.94x as at Tests 30 June 2012 (ratio decreases each 6 Margin step-up (Yr 4&5) 50bps / 50bps months until
Slide 44: APRR revolving credit facility: key terms
APRR revolving credit facility: key terms Item Terms Facility amount €0.720bn Maturity February 2017 Margin 150bps Margin step-up 50bps if APRR if rated below investment grade by S&P, Moody’s or Fitch Utilisation fee 50bps p.a. p a on total drawn facility amount Commitment fee 35% of margin Financia
Slide 45: APRR/Eiffarie debt summary
APRR/Eiffarie debt summary E i Estimated d balances b l post refinancing fi i € €m (as at 29 February 2012) APRR gross debt1 ~7,937 APRR cash balance1 681 ~681 APRR net debt1 ~7,256 Eiffarie gross debt2 2,765 Eiffarie cash balance2 ~91 Eiffarie net debt2 ~2,674 Consolidated Net Debt/EBITDA3 ~7.1x AP
Slide 46: Dividend considerations: Quantum
Dividend considerations: Quantum The steps by which the Eiffarie refinancing was executed and the terms of the new debt present important considerations for cash flow to Eiffarie shareholders 1. Quantum of any APRR dividend to Eiffarie for the remainder of 2012 to be limited to profit accrued during
Slide 47: Dividend considerations: Timing
Dividend considerations: Timing The steps by which the Eiffarie refinancing was executed and the terms of the new debt present important considerations for cash flow to Eiffarie shareholders 1. Timing of APRR dividends to Eiffarie: first dividend anticipated by 31 December 2012 — APRR typically pays
Slide 48: Simplified distribution mechanics
Simplified distribution mechanics Cash flow: APRR to MQA shareholders EIFFARIE/FE APRR dividend A Add: APRR tax instalments to FE B Less: Other1 C Less: Eiffarie net interest D Less: FE tax payments to State E Distributable cash F=A+B–C–D–E Less: Debt repayment (Cash sweep) G = CASH SWEEP % *(F) Cas