Atlas Arteria · ASX:ALX

Atlas Arteria — Macquarie Atlas Roads — Investor Presentation (August 2014)

64 slides from Atlas Arteria's investor presentation, Aug 28, 2014

  1. Slide 1: ASX Release: September 2014 Investor Presentation

    Macquarie Atlas Roads Limited Macquarie Atlas Roads International Limited ACN 141 075 201 EC43828 No. 1 Martin Place Telephone 612 8232 3333 The Belvedere Building SYDNEY NSW 2000 Facsimile 612 8232 4713 69 Pitts Bay Road GPO Box 4294 Internet: www.macquarie.com/mqa Pembroke HM08 SYDNEY NSW 1164 DX

  2. Slide 2: Macquarie Atlas Roads Investor Presentation September 2014

    Macquarie Atlas Roads Investor Presentation September 2014

  3. Slide 3: Important notice and disclaimer

    I t t notice Important ti and d 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

  4. Slide 4: Important notice and disclaimer

    I t t notice Important ti and d disclaimer di l i 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 regist

  5. Slide 5: Contents

    C t t Contents 1. Overview 4 2. APRR 13 3 3. Other Assets 31 4. Distributions 45 Appendix 52 MACQUARIE ATLAS ROADS PAGE 3

  6. Slide 6: Overview

    Ms ——+.—— Node Ga" pes OL

  7. Slide 7: MQA overview

    i MQA overview Macquarie Atlas Roads (MQA) is a global toll road operator and developer MQA Listed Li t d on th the ASX (Top (T 200) Market Capitalisation of $1.68bn1 20.14% Various % APRR 5 Other Toll Roads Located in US and Europe  Accounts for ~85% of MQA's value  Cash flow potential in the lon

  8. Slide 8: MQA portfolio

    tf li MQA portfolio MQA’s toll road investments are located in France, UK, USA and Germany1 1 MQA owns various percentage stakes in these assets 1. assets. 1. MQA owns various percentage stakes in these assets. MACQUARIE ATLAS ROADS PAGE 6

  9. Slide 9: MQA structure

    t t MQA structure MQA's structure is integral to its strategy  MQA has no corporate level debt and A$20.3m in available cash1  Each asset is in a separate holding company structure  All asset level debt is project finance, with no recourse to MQA or any other portfolio asset  There are no cross-

  10. Slide 10: MQA evolution since listing

    l ti since MQA evolution i lilisting ti Today, MQA’s focus is 2010 - 2012 2013 on growing i di distributions t ib ti and growing the value of its portfolio  Listed on ASX on January  Commencement of Historical MQA Distributions (cps) 2010 distributions for MQA shareholders 8.22  Focus on value re

  11. Slide 11: MQA value considerations

    l considerations MQA value id ti MQA is a vehicle for investment in APRR/Eiffarie and Dulles Greenwayy with additional value from other assets APRR + Dulles Greenway + Other Assets = MQA  APRR/Eiffarie is MQA’s largest and most valuable asset – Expected to provide MQA with a long-term distribution

  12. Slide 12: MQA governance

    MQA governance MQA has majority independent Boards and independent Chairmen  Base fee calculated quarterly on market capitalisation MQA structure Market capitalisation Base management fee1 Macquarie Up to A$1.0bn 1.75% plus Resources (Staff, premises, IT, etc) More than A$1.0bn 1.00% 100% MQA  Per

  13. Slide 13: MQA Performance

    P f MQA Performance MQA has outperformed its Benchmark by 370% since listing1  Three performance fees have been calculated to date MQA vs Benchmark – 2010 performance fee: A$12.5m $3.50 MQA Market Volume (m) (RHS) 21.0 – 2011 performance f ffee: A$50 A$50.1m 1 MQA Share Price (LHS) – 2014 performan

  14. Slide 14: Portfolio Snapshot

    P tf li S Portfolio h t Snapshot Growth in portfolio traffic traffic, revenue and EBITDA levels  Overall positive results despite weak economic conditions in Europe  Revenue growth underpinned by tariff increases – 2013 includes impact of scheduled substantial toll increases at Chicago Skyway FY 2

  15. Slide 15: APRR

    APRR

  16. Slide 16: APRR overview

    i APRR overview Concession  31 December 2032 (APRR, AREA) expiry  31 December 2060 (ADELAC)  31 December 2068 (Maurice Lemaire Tunnel) T lli Tolling  2014 2014-18: 18 annuall ttariff iff increase i off 85% off CPI (excl. tobacco) + 0.37% for APRR and 85% of CPI (excl. tobacco) + 0.41% for AREA u

  17. Slide 17: APRR concessions

    i APRR concessions APRR comprises four concessions APRR Concession Expiry: 2032 Road Length: 1,840km AREA Concession Expiry: 2032 Road Length: 394km ADELAC Concession Expiry: 2060 Road Length: 19km ML TUNNEL Concession Expiry: 2068 Road Length: 11km MACQUARIE ATLAS ROADS PAGE 15

  18. Slide 18: APRR performance

    f APRR performance Growth maintained through economic cycles  EBITDA growth of 3.4% in 2013 and 3.7% in 1H 2014 APRR EBITDA (€m)1 and France GDP growth (%)2 €1,750m 3.0% €1,500m 1475 2.0% 1,399 1,428 1,326 1,265 €1 250m €1,250m 1 208 1,244 1,208 1 0% 1.0% €1,000m 0.0% 974 1,068 924 941 €750m 841 88

  19. Slide 19: APRR performance (cont'd)

    f APRR performance ( t’d) (cont’d) Revenue supported pp by y toll increases implemented p in each yyear 12 months to 31 December 2013 6 months to 30 June 2014  Traffic: +0.8%; Revenue: +3.0%  Traffic: +2.0%; Revenue: +2.8% EBITDA Performance (€m)1 Quarterly Traffic Performance (VKTm) 70.3% 71.0% 7

  20. Slide 20: APRR traffic analysis

    APRR ttraffic ffi analysis l i 6 months to 30 June 2014 Revenue and traffic analysis 1H 2014 – LV traffic up 1.9% vs pcp – HV traffic up 2.2% vs pcp 3% 16%  Positive trend observed in 2013 continuing LV 34% into 2014 Traffic HV Revenue Other Revenue 63%  95.1% transactions automated in 1H 2014 84%

  21. Slide 21: APRR traffic – light vehicles

    APRR ttraffic ffi – light li ht vehicles hi l Light vehicle traffic has outperformed GDP  Traffic performance continues to be aligned to 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 201

  22. Slide 22: APRR traffic – heavy vehicles

    APRR ttraffic ffi – heavy h hi l vehicles Heavy vehicles correlated to French manufacturing  Import 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 a

  23. Slide 23: APRR operations

    ti APRR operations Operating expenses (ex operating taxes) broadly flat since 2006  Headcount (FTE) at 31 December 2013 was 3,601 (2012: 3,646, 2011: 3,722) €800m 80.0% 68 4% 68.4% 69 2% 69.2% 70.0% 70.3% 67.0% 67 8% 67.8% 68 0% 68.0% 64.0% €600m 60.0% 232 229 236 240 2641 258 2752 231 €400m 40.0%

  24. Slide 24: APRR cash flow to MQA

    h flflow tto MQA APRR cash Potential to improve overall financing terms over time Simplified holding structure MQA Q HoldCo debt 20.14% of free cash flow – Margin 300bp (350bp Feb 2015) HoldCo swap until June 2018 Eiffarie – Cash sweep: 25% free cash flow1 ‒ Average of €3,368m swapped (75% Jun 2015)

  25. Slide 25: APRR profit

    €300m €350m €400m €450m €500m Net profit 2011 395 MACQUARIE ATLAS ROADS 17 Revenu ue fit APRR profit Increase in APRR’s 6 Opex x 6 Operating ttaxes 7 D& &A, provision ns, other 36 Net interrest 4 Income ttax Ne et profit 2012 392 61 Revenu ue 2 Opex x APRR s profit reflecting higher revenue and inte

  26. Slide 26: APRR bond issues

    APRR b d iissues bond APRR well supported in bond markets  2014 APRR debt issuances – January: €500m EMTN issued due in 2020 (margin of 90bps over mid-swaps) coupon of 2.25% – April: p €500m floatingg rate notes due in 2019 ((margin g of 75bps p over 3 month EURIBOR)) APRR Bonds: Mid-Yield to Matur

  27. Slide 27: APRR/Eiffarie debt maturity profile

    APRR/Eiff i debt APRR/Eiffarie d bt maturity t it profile fil Financing costs expected to reduce through lower interest rates and deleveraging over time  APRR credit ratings – Fitch: BBB+ (stable outlook); S&P: BBB (positive outlook) APRR/Eiffarie Debt Maturity Profile (€m)1 4,500 3,966 4,000 3,500

  28. Slide 28: APRR free cash flow

    APRR ffree cash h flflow Financière Eiffarie distributions, distributions and therefore MQA distributions 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 p y at the APRR

  29. Slide 29: APRR capital expenditure

    it l expenditure APRR capital dit Since 2006, ~€3.15bn €3.15bn has been spent to grow, improve and maintain the network  Average total annual capex forecast of ~€320m (real) between 2014-20181 – Includes ~€500m capital expenditure under 2014-2018 management contract €600 €500 24 81 €400 159 65 45 €

  30. Slide 30: APRR management contracts – main projects

    APRR managementt contracts t t – main i projects j t Widening Projects 1. A6 at Auxerre (Southbound) 2 A71 north 2. th off Clermont- Cl t Ferrand (Northbound) 3. A41 north of Annecy (both directions) Other Projects 4. A89-A6 link road construction north of Lyon y 5. A43/A41/Chambery high speed urban

  31. Slide 31: APRR/Eiffarie – looking forward

    APRR/Eiff i – looking APRR/Eiffarie l ki fforward d Stimulus package  Additional capex under government stimulus package in return for concession extensions  Subject to European Commission and government determinations expected to be concluded during 2014 Land tax  Land tax (operational tax based

  32. Slide 32: APRR/Eiffarie ownership structure

    APRR/Eiff i ownership APRR/Eiffarie hi structure t t Ownership Ownership structure  July 2014 – MQA acquired an additional 1.41% Third Party Other Macquarie interest in MAF2, increasing its stake to 40.29% MQA Investors Managed Funds – Represents a 0.71% indirect interest in APRR, 40 29% 40.29% 27.

  33. Slide 33: Other Assets

    Other Assets

  34. Slide 34: Dulles Greenway overview

    D ll G Dulles i Greenway overview Concession expiry  15 February 2056  From 2014 to 2020, tolls escalate by Tolling greater of CPI +1%, Real GDP or 2.8%  By application to the SCC thereafter Ownership  50% estimated economic interest Length  22 km  L Locatedd iin L Loudoun d C County one of th

  35. Slide 35: Dulles Greenway performance

    D ll G Dulles f Greenway performance Positive traffic growth observed in 2013 continuing into 2014  Growth in EBITDA supported by traffic growth and toll increases  Distribution outlook: no distributions expected before 2019 EBITDA (US$m) vs traffic (ADT) US$m ADT 60 50,000 50 49,000 40 48,000 30

  36. Slide 36: Dulles Greenway performance

    D ll G Dulles f Greenway performance YTD 2014 reflects emerging improvement in local economic conditions  12 months to 31 December 2013  6 months to 30 June 2014 – Traffic: +1.5%; Revenue: +3.5% – Traffic: +1.8%; Revenue: +3.4%  EBITDA impacted by higher operating  Toll increases effective from

  37. Slide 37: Dulles Greenway traffic corridor

    D ll G Dulles t ffi corridor Greenway traffic id Dulles Greenwayy well p placed to p provide capacity p y as corridor develops p  The Dulles Greenway has two key competitors – Route 7 and Waxpool Rd  Competing roads have received considerable Dulles Greenway Corridor capacity capac ty upg upgrades

  38. Slide 38: Dulles Greenway traffic corridor (cont'd)

    D ll G Dulles t ffi corridor Greenway traffic id (cont’d) ( t’d) y share of traffic increases as corridor traffic volumes rise  Greenway  Following significant increases, MWAA intends to freeze tolls on the adjoining Dulles Toll Road through to 20181 Hourly traffic corridor volumes2 vs Dulles Gree

  39. Slide 39: Dulles Greenway looking forward

    D ll G Dulles Greenway llooking ki fforward d Dulles Corridor Metrorail Project expected to improve accessibility and further stimulate economic and demographic development in areas served  23 mile extension of existing Metrorail Dulles Corridor Metrorail Project system t by b Metropolitan M t lit

  40. Slide 40: Dulles Greenway corridor

    D ll G Dulles id Greenway corridor Demographic g p factors expected p to p progressively g y increase congestion g in corridor Dynamic Corridor (Population Growth p.a.%)1 3.0% 2.5% 2 0% 2.0% 1.5% 1.0% 0.5% 0.0% Loudoun County Fairfax Co./Fairfax Arlington County Washington D.C. City/Falls y Church 2

  41. Slide 41: Dulles Greenway – other developments

    D ll G Dulles th d Greenway – other l t developments Capital expenditure  Total capex estimated to be US$4.5m for 2014, which includes pavement resurfacing work of ~US$3m  Average total annual capex guidance of ~US$2 ~US$2.5m 5m (real) between 2015 20191 2015-2019 State Corporation Commission hear

  42. Slide 42: Dulles Greenway financing

    D ll G Dulles Greenway fifinancing i Debt 100% fixed rate bonds, amortisation schedule locked in until 2056 No refinancing requirements Dulles Greenway Debt Maturity Profile (US$m) 700 250 Maturity Maturityprofile profilefor forexternal externaldebt debtas asatat30 31June 2014 (excl. December 2013 f

  43. Slide 43: Chicago Skyway

    Chi Chicago Sk Skyway Concession expiry • 24 January 2104  Set schedule from 2005 to 2017 Tolling  After 2017, tolls can escalate annually by the greater of 2%, CPI, or nominal GDP per capita Ownership  22.5% (22.5% MIP; 55% Cintra) Length  12.5km, majority elevated  Chi Chicago - third thi d l

  44. Slide 44: Indiana Toll Road

    I di Indiana T Tollll R d Road Concession expiry  29 June 2081  Tolls increase annually on 1 July by the greater of 2%, % increase of the CPI index or nominal i l GDP per capita it Tolling  State subsidised ‘toll freeze’ for passenger vehicles using ETC scheduled to remain in place until 2016 O O

  45. Slide 45: Warnow Tunnel

    W Warnow T l Tunnel Concession expiry  15 September 2053  Tolling linked to pre-tax equity IRR – IRR <17%: tolls may rise at a rate higher than inflation Tolling – IRR 17%-25%: tolls linked to inflation – if IRR >25%: tolls remain fixed  Toll increases subject to toll application audit by the Lan

  46. Slide 46: M6 Toll

    M6 T Tollll Concession expiry • 31 January 2054 Tolling • Market based tolling Ownership • 100%1 Length • 43 km • Bypasses the city of Birmingham and the M6 motorway, one of the most congested L Location ti / Strategic St t i motorways in the UK Attraction • Significant industrial, housing and econo

  47. Slide 47: Distributions

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  48. Slide 48: MQA distribution framework

    MQA di t ib ti fframework distribution k MQA will pass through receipts originating from APRR, after addressing corporate requirements  Corporate requirements include: – Corporate expenses (including base fees and any performance fees paid in cash) – Maintaining a prudent capital reserve  Cash flo

  49. Slide 49: MQA distribution

    MQA di t ib ti distribution MQA 2H 2014 distribution guidance of 8 8.2 2 cents per security  Subject to foreign exchange movements and unforeseen events  Expect to declare in September and pay in early October  Distribution 100% from MARIL. Components will be advised following the conclusion of a

  50. Slide 50: MQA distributions

    MQA di t ib ti distribution MQA Q distributions supported pp by y cash originating g g from APRR APRR APRR Profit APRR Profit Profit f 2H 2013 1H 2014 Eiff i Eiffarie +Tax Grouping 1H 2014 2H 2014 - Debt Service Eiffarie Cash Flow Eiffarie Cash Flow MQA 2H 2014 1H 2015 + Other Receipts - Corporate E

  51. Slide 51: Cash flow: APRR to MQA shareholders

    C h flflow: APRR tto MQA shareholders Cash h h ld Cash flow: APRR to MQA shareholders Eiffarie/Financière Eiffarie APRR dividend A add APRR tax instalments to FE B add Other1 C less Eiffarie net interest D less FE tax payments/provisions E Distributable cash F=A+B+C–D–E less Debt repayment G = max (

  52. Slide 52: Cash flow: APRR to MQA shareholders (cont'd)

    C h flflow: APRR tto MQA shareholders Cash h h ld ((cont’d) t’d) Cash flow: APRR to MQA shareholders Eiffarie/Financière Eiffarie (€m) 2H 2012 1H 2013 2H 2013 1H 2014 APRR dividend 121 188 213 241 add APRR tax instalments to FE 117 125 120 196 add Other1 2 (23) 5 (2) less Eiffarie net interest (103)

  53. Slide 53: MQA free cash flow

    f MQA free h flow cash fl Cash flow: APRR to MQA shareholders FY 2013 APRR free cash flow (€m) 737 Eiffarie net interest (€m) (224) Eiffarie opex (€m) (1) Tax grouping (€m) 174 Consolidated free cash flow (€m) 686 MQA’s proportionate share in € (19.44%) (€m) 133 MQA’s proportionate share in A$ (19.4

  54. Slide 54: Appendix

    Appendix

  55. Slide 55: Register Analysis

    R i t A Register l i 1 Analysis Retail 9% Macquarie 2 16% Other Foreign Institutions 14% Lazard 7% Goldman Sachs 7% Other Australian Institutions 47% 1. Register data as at 31 July 2014. Substantial shareholdings based on most recent notices (as of 25 August 2014). 2. Macquarie’s principal holdings

  56. Slide 56: Consolidated profit & loss account

    Consolidated profit p & loss account Statutory accounts – half year ended 30 June 2014 Half year to Half year to  Revenue R includes i l d M6 Toll T ll management A$m 30 Jun 14 30 Jun 13 fee income (annual fee of £750,000 Revenue 1.0 0.2 indexed, paid in July and January) Performance fees (58.2) -

  57. Slide 57: Consolidated balance sheet

    Consolidated balance sheet Statutory accounts – as at 30 June 2014 A$m 30 Jun 14 31 Dec 13  Investments I in i associates i includes i l d APRR Current assets 23.1 19.6 and Dulles Greenway accounted for using the equity method Investments in associates 777.5 862.7 Total assets 800.6 882.3  Current

  58. Slide 58: MQA cash flow summary

    h flflow summary MQA cash Available cash (A$m) Half year to Half year to  Distribution Di ib i from f Financière Fi iè Eiffarie Eiff i off 30 Jun 14 30 Jun 13 €25.6m in March 2014 (€14.6m in March Opening balance – 1 January 17.7 13.7 2013) Distributions from assets 39.6 18.5 Interest on corporate

  59. Slide 59: Traffic and toll revenue performance

    T ffi and Traffic d toll t ll revenue performance f Change vs Quarter vs pcp Asset 1H 2014 1H 2013 pcp Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 APRR Light Vehicle VKT (millions) 8,578 8,416 1.9% 0.5% 0.6% 0.5% 2.1% 0.5% 3.2% Heavy Vehicle VKT (millions) 1,639 1,605 2.2% (3.2%) 0.1% 2.5% 3.2% 1.9% 2

  60. Slide 60: Asset debt metrics

    A t debt Asset d bt metrics ti Net Debt/ EBITDA/ As at 30 Jun 141 Gross Debt Cash Net Debt EBITDA Interest DSCR Lock-Up Hedging APRR/Eiffarie2 €m 10,405.9 1,399.0 9,006.9 6.00x N/A 2.04x 1.60x 95.1% − APRR €m 7,831.1 1,065.6 6,765.6 4.51x 4.36x n/a n/a n/a − Eiffarie €m 2,574.8 333.4 2,241.4 n/a n/a

  61. Slide 61: Asset debt maturity profile and ratings

    A t debt Asset d bt maturity t it profile fil and d ratings ti As at 30 Jun 141 2H 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023+ APRR/Eiffarie €m 500.0 1,344.0 1,247.7 3,965.8 1,211.0 1,079.2 579.4 64.0 125.6 27.8 Dulles Greenway US$m - 56.7 54.0 51.0 39.2 37.6 19.8 23.0 39.6 673.4 Chicago Skyw

  62. Slide 62: Eiffarie term loan facility – key terms

    Eiff i term Eiffarie t l loan ffacility ilit – key k tterms Item Terms Facility amount €2.765bn Maturity February 2017 Margin 300bps Step-up Year 4: 50bps Year 5: 50bps Interest period Six months p Cash sweep Years 1–3: 25% Year 4: 75% Year 5: 100%  Subject to a minimum cash sweep − Details can be

  63. Slide 63: Eiffarie minimum cash sweep

    Eiff i minimum Eiffarie i i h sweep cash Year Period end Minimum cash sweep (€m) 2012 June 14 December 30 2013 June 47 December 44 2014 June 53 December 46 2015 June 161 December 153 2016 June 243 December 114 MACQUARIE ATLAS ROADS PAGE 61

  64. Slide 64: European economy outlook

    E European tl k economy outlook French economy remains weak weak, as does Europe generally France, Germany and Eurozone GDP forecasts1 2.50% 2.00% 1.50% 1.00% 0.50% 0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 France Germany Eurozone 1. Sources: 2014-2015: Consensus Economics August 201

Macquarie Atlas Roads — Investor Presentation (August 2014) on 6ix