Atlas Arteria · ASX:ALX
Atlas Arteria — FY2019 Earnings Presentation
49 slides from Atlas Arteria's earnings presentation, Feb 27, 2020
Slide 1: ASX Release: Atlas Arteria Results Presentation for year ended 31 December 2019
27 February 2020 ASX RELEASE Atlas Arteria Results Presentation for the year ended 31 December 2019 Atlas Arteria (ASX:ALX) is pleased to release the attached results presentation for the year ended 31 December 2019. ___________________________________________________________________________________
Slide 2: Results Presentation for the year ended 31 December 2019
Results Presentation for the year ended 31 December 2019 27 February 2020
Slide 3: Disclaimer
2 Disclaimer General Securities Warning Non-IFRS information Atlas Arteria comprises Atlas Arteria This presentation is not an offer or invitation for subscription This presentation includes certain financial measures Limited (ACN 141 075 201) (ATLAX) and or purchase of or a recommendation of securi
Slide 4: Country/Region specific disclaimers
3 Country/Region specific disclaimers Canada Hong Kong Malaysia United Kingdom This document does not constitute an This document has been prepared and Nothing in this presentation constitutes the In the United Kingdom this document is offer to sell securities of Atlas Arteria and intended to be dis
Slide 5: Contents
4 Contents 1. Key Highlights Graeme Bevans, CEO 2. Financial Performance Nadine Lennie, CFO 3. Operations Graeme Bevans, CEO 4. Outlook Graeme Bevans, CEO 5. Appendices
Slide 6: Key Highlights
5 1 Key Highlights Graeme Bevans Chief Executive Officer Photo of APRR, source: APRR
Slide 7: Delivering against strategy and a year of significant achievement
6 1. Key Highlights Delivering against strategy and a year of significant achievement Dulles 31 December 2019 Internalised Greenway management $47m 31.14% $6.88bn 36 cps rate case team lodged APRR transaction to management costs1 in agreement to market forecast distribution to support future complet
Slide 8: Financial Highlights
7 1. Financial Highlights Atlas Arteria continued to demonstrate strong financial performance throughout 2019 Revenue Traffic Revenue EBITDA Business Highlights Contribution Growth Growth Growth • Traffic continues to perform well even when compared with a strong 2018 • Light vehicle traffic growth
Slide 9: APRR Transaction Update
8 1. APRR Transaction Update All approvals received for the APRR Transaction & Eiffarie term debt refinance is complete APRR Transaction Update • In mid February, Atlas Arteria obtained anti-trust clearance from the European APRR Transaction Benefits Commission and foreign investment control clearan
Slide 10: Atlas Arteria Distributions
9 1. Atlas Arteria Distributions New guidance for a 20% increase in distributions to be paid in 2020 Atlas Arteria distributions (cps) 18.0 1.0 H2 2019 and H1 2020 distribution guidance raised from 17.0 cps to 18.0 cps Added to previous guidance 17.0 Previous guidance H1 2020 12.0 15.0 Previous guid
Slide 11: Sustainability
10 1. Sustainability A sustainability framework and strategy has been developed with four clear priorities The framework was developed: • With independent external advisers who undertook a materiality assessment with key stakeholders • Leadership from the Atlas Arteria Boards SAFETY CUSTOMERS & OUR
Slide 12: Sustainability
11 1. Sustainability A year of development and achievement SAFETY CUSTOMERS & OUR PEOPLE ENVIRONMENTAL COMMUNITY STEWARDSHIP • LTIFR: • Each day our network provides • In 2019 we successfully set up • APRR GHG emission reduction - APRR 4.6, down on prior year customers substantial savings a strong h
Slide 13: Financial Performance
12 2 Financial Performance Nadine Lennie Chief Financial Officer Photo of APRR, source: APRR
Slide 14: Income Statement
13 2. Income Statement Atlas Arteria A$m 2019 2018 % Chg Atlas Arteria is profitable pre-notable items Revenue, other income • 2019 consolidates Dulles Greenway & Warnow Tunnel • 2018 consolidates Dulles Greenway & Warnow Tunnel post 20 Sep — Toll Revenue 150.4 126.8 19% — Other revenue 24.8 5.7 335
Slide 15: APRR Financial Performance
14 2. APRR Financial Performance Earnings growth driven by operational performance and a low cost financing structure €m1 2019 2018 % change Traffic (VKTbn) 24.6 24.3 1.1% • Continued strong revenue growth driven by traffic growth and toll increases: 1.81% (APRR) and 2.01% (AREA) Operating revenue 2
Slide 16: APRR Financial Position
15 2. APRR Financial Position APRR in a strong financial position with A- rated debt APRR Group pro-forma debt maturity profile as at 31 Dec 2019 • APRR has sufficient balance sheet flexibility for €m capital growth 3,000 €1,000m of APRR bonds Rating A- Stable Outlook (S&P and Fitch) • Outstanding d
Slide 17: Dulles Greenway financial overview
16 2. Dulles Greenway financial overview EBITDA margins continue to grow as operational efficiencies are implemented US$m1 2019 2018 % change • Toll revenue - supported by increased tolls Traffic (ADT) 48,757 50,193 (2.9%) • Lower operational expenses reflect reductions in toll collection Operating
Slide 18: Atlas Arteria cash flow for H2 2019
17 2. Atlas Arteria cash flow for H2 2019 APRR dividends to Atlas Arteria Atlas Arteria cash flows Atlas Arteria cash balance (€m) (A$m) (A$m) H1 19 Remove APRR Eiffarie Dist. from MAF2 ALX ALX Warnow MIBL MQG Corp. HQ Transition Investment Interest Net cash Existing H1 2019 Closing APRR net company
Slide 19: Capital Management Strategy
18 2. Capital Management Strategy Managing capital for a sustainable business Increased cash flows The approach Continued growth in cash available to the Operating business cashflows support liquidity business from operational performance and management & sustainable distribution re-financings Balan
Slide 20: Operations
19 3 Operations Graeme Bevans Chief Executive Officer Photo of Dulles Greenway, source: David Madison photography
Slide 21: Value for Customers
20 3. Value for Customers Each day our network provides customers substantial saving on their travel time 120 MIN1 (PARIS-LYON) saving 10 MIN1 saving APRR AT A COST OF €35.40 DULLES GREENWAY AT A COST OF US$5.80 18 MIN1 (ANNECY – GENEVA) 16 MIN1 saving ADELAC saving AT A COST OF €8.40 WARNOW TUNNEL
Slide 22: APRR and ADELAC connecting Paris with Lyon and eastern France
21 3. APRR and ADELAC connecting Paris with Lyon and eastern France An efficient, safe and cost effective network for customers Comparison between average tolls on APRR versus rest of France 1 30 25 20 Euro cents per VKT 15 10 5 - ASF/ESCOTA ADELAC A'LIENOR COFIROUTE ATMB SANEF/SAPN APRR/AREA ARCOUR
Slide 23: APRR Traffic Update
22 3. APRR Traffic Update Continued traffic growth in line with longer-term trends • Traffic at APRR continues to grow, with 1.1% increase Traffic continues to experience growth 1.25 in traffic for 2019 1.20 LV VKT HV VKT VKT, Rolling 12m, index — APRR connects two of the strongest growing regions i
Slide 24: APRR and ADELAC Operating Overview
23 3. APRR and ADELAC Operating Overview Ongoing commitment to improving operational efficiency to drive customer satisfaction and improve margins Enhancing customer experience to drive value • 530 variable message signs at key • 4,135 carpool parking spots available to allow locations customers to
Slide 25: APRR Capital Expenditure
24 3. APRR Capital Expenditure Investing in capital projects to grow APRR footprint and improve customer experience • Capital expenditure guidance excluding RCEA project (€ real at 31 Dec 2019): — ~€1.2bn over the next 3 years (2020-22) — Then an average ~€150m to €200m per annum over the long-term
Slide 26: Dulles Greenway
25 3. Dulles Greenway Connecting growing, prosperous communities to connector roads and Washington DC On a stand alone basis, tolls on the Dulles Greenway are in the mid to high end of prices for the roads in Virginia1 20.0 15.0 Toll price (US$) 10.0 5.0 0.0 Toll road 1A Toll road 2A DTR Toll road 5
Slide 27: Dulles Greenway Operational Update
26 3. Dulles Greenway Operational Update Business improvement initiatives continue to be the focus Traffic Update Operating Update Traffic in 2019 impacted by many factors: • Reduced hours of cash collection and new staff rotations will reduce annual • Price rises on the DTR of 30% at the main costs
Slide 28: Dulles Greenway Capital Expenditure
27 3. Dulles Greenway Capital Expenditure Capital projects to improve traffic flow and overall performance Dulles Toll Road (DTR) Connector Project (US$18 million) Target time saving up to 5 mins in am peak1 • Alleviate morning peak congestion where Dulles Greenway merges on to the DTR. Both phases
Slide 29: Warnow Tunnel Operating Overview
28 3. Warnow Tunnel Operating Overview Smaller business in the portfolio performing well Operations and Financial update • Average 9 hours per employee of safety training completed • 45% decrease in wrong-way eastbound driving during 2019, since the installation of the wrong-way driving signs near t
Slide 30: Outlook
29 4 Outlook Graeme Bevans Chief Executive Officer
Slide 31: ALX Value Creation
30 4. ALX Value Creation Implementation of strategy well underway • Streamline the current structures where possible • Lengthen the tenure of the • Disciplined capital management to build sustainable distributions average concession life • Active operational management • Diversify and manage risk Co
Slide 32: Investment Discipline
31 4. Investment Discipline Focus on strategy Leverage internal Optimal leverage Valuation discipline capability • Streamline the existing • Strong road operations and • Focus on investment grade • Disciplined approach portfolio maintenance experience leverage metrics to all investment • New opportu
Slide 33: Investment Potential
32 4. Investment Potential Opportunities within existing networks • RCEA negotiations underway • Opportunities to alleviate road congestion in Paris and other Congestion levels in major cities (%)1 major French cities - ongoing dialogue with French State to 50% improve the network and achieve their
Slide 34: Positive Outlook for 2020
33 4. Positive Outlook for 2020 Atlas Arteria APPR Dulles Greenway Warnow Tunnel • Focus on opportunities to • HV and LV traffic growing in • Projects to ease congestion • Traffic expected to return create sustainable cash flows line with long term trends ongoing to longer term trends once and lengt
Slide 35: Atlas Arteria Investment Proposition
34 4. Atlas Arteria Investment Proposition Access to stable and Material exposure to 32.2% TSR for the year inflation linked earnings European and French ending 31 Dec 2019 GDP Experienced internal 20% increase in Strong growth management team distributions forecast potential within and with direct
Slide 36: Thank You
35 Thank You Q&A Contact for investors Nadine Lennie | Chief Financial Officer Australia : 1800 621 694 International: +61 (0)438 493 692 investors@atlasarteria.com
Slide 37: Appendices
36 5 Appendices Photos of Dulles Greenway, source: David Madison photography
Slide 38: ALX Summary Corporate Structure – as at 31 Dec 2019
37 5. ALX Summary Corporate Structure – as at 31 Dec 2019 Stapled ATLAX (Australia) ATLIX (Bermuda) 13.43% 86.57% economic interest (via loans) Dulles Greenway 100% Macquarie Managed Third Party Investors Funds MIBL 33.71% 16.28% 50.01% Macquarie Eiffage MAF / MAF2 Group 100% 50% + 1 share 50% - 1 s
Slide 39: ALX Summary Corporate Structure – post APRR Transaction Completion
38 5. ALX Summary Corporate Structure – post APRR Transaction Completion Stapled ATLAX (Australia) ATLIX (Bermuda) 13.43% 86.57% economic interest (via loans) Dulles Greenway 100% Third Party Investors Eiffage MIBL 33.71% 4.00% 62.29% Eiffage MAF / MAF2 100% Warnow Tunnel 50% + 1 share 50% - 1 share
Slide 40: The Atlas Arteria Business
39 5. The Atlas Arteria Business Atlas Arteria Portfolio Dulles Warnow APRR ADELAC Greenway Tunnel 25.00%1 25.03%1 100%3 100% 2,318km 20km commuter 22km commuter 2.1km road motorway road connecting route into the and tunnel in network in Annecy to greater Rostock, Eastern France Geneva Washington DC
Slide 41: Consolidated Balance Sheet
40 5. Consolidated Balance Sheet Statutory accounts As at As at 31 Dec 2019 31 Dec 2018 A$m ALX Total ALX Total Current assets 1,593.6 189.0 Investments in associates 1,423.3 1,570.0 Tolling concessions 2,438.6 2,578.4 Goodwill 14.1 79.4 Other non-current assets 265.3 211.8 Total assets 5,734.9 4,62
Slide 42: Proportionate EBITDA by business
41 5. Proportionate EBITDA by business APRR 100% (€m) 2019 2018 % change Dulles Greenway 100% (US$m) 2019 2018 % change Traffic (VKTm) 24,580 24,322 1.1% Traffic (ADT) 48,757 50,193 (2.9%) Operating revenue 2,611.0 2,537.6 2.9% Operating revenue 89.7 90.8 (1.2%) Operating expenses (668.9) (663.7) (0
Slide 43: ALX corporate cash flow summary
42 5. ALX corporate cash flow summary Cash (A$m) 2019 2018 Opening balance – 1 January 92.8 41.6 Distributions from APRR 238.2 249.4 Fees from Warnow Tunnel 0.3 0.2 Interest income on corporate cash balances 1.2 0.9 Manager, adviser base fees & performance fees (31.0) (61.9) Atlas Arteria internalis
Slide 44: Cash flow: APRR to ALX securityholders
43 5. Cash flow: APRR to ALX securityholders Eiffarie / Financière Eiffarie (FE) (€m) H1 2019 (A) H2 2018 (A) H1 2018 (A) APRR dividend 371 381 400 add/less Cash withheld / released for 1H19 tax change impact (14) - - add APRR tax instalments to FE 240 204 246 add Eiffarie / FE opex reserve (includi
Slide 45: APRR Tariff formula 2020-2023
44 5. APRR Tariff formula 2020-2023 Inflation-linked tolling and established regulatory regime underpin APRR’s predictable cashflows • Stable concession regime: In place for another 15-16 years • Predictable, inflation linked toll increases: Contracted toll increase of 70% of CPI to concession end •
Slide 46: French Tax Rates
45 5. French Tax Rates The Current Tax Situation Corporate Income Tax Motorway Specific Tax • The French Parliament approved the Finance Bill for 2020 • French Tax Code provides for a specific tax payable by motorway in December 2019 companies based on the number of kilometres travelled by users on
Slide 47: Dulles Greenway toll regime
46 5. Dulles Greenway toll regime Tolls on the Dulles Greenway are set on application by the Virginia State Corporation Commission (SCC) under the Virginia Highway Corporation Act (1988) (VHCA) • Section §56-542I of VHCA stipulates that: from 1 Jan 2013 through to 1 Jan 2020, toll rates would increa
Slide 48: Sources
47 5. Sources Slide 20 Value for Customers Warnow Tunnel Based on Google maps: Lutten Klein to Dierkow-Neu: Warnow Tunnel eastbound: Monday 8:30am departure (14-20min) APRR Alternative eastbound: Monday 8:30am departure (22-45min) Paris to Lyon Warnow Tunnel westbound: Monday 5:30pm departure (14-22
Slide 49: Glossary of terms
48 Glossary of terms AADT Average annual daily trips GDP Gross Domestic Product ACR Additional Coverage Ratio HV Heavy Vehicles ADELAC Autoroute des deux Lacs LBP Leesburg Bypass ADT Average daily trips LTI Lost time injury ALX Atlas Arteria LTIP Long Term Incentive Plan APRR Autoroutes Paris-Rhin-R