Atlas Arteria · ASX:ALX
Atlas Arteria — Macquarie Atlas Roads — Investor Presentation (August 2011)
67 slides from Atlas Arteria's investor presentation, Aug 29, 2011
Slide 1: ASX Release
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Slide 2: Macquarie Atlas Roads Investor Presentation August 2011
MACQUARIE ATLAS ROADS INVESTOR PRESENTATION AUGUST 2011 1
Slide 3: 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 4: Disclaimer
Disclaimer Hong Kong Thi d This documentt h has b been preparedd and d iintended t d d tto b be di disposedd solely l l tto ""professional f i l iinvestors" t " within ithi th the meaning i off th the SSecurities iti and dFFutures t O Ordinance di (C (Cap. 571) of Hong Kong for the purpose of provid
Slide 5: Agenda
Agenda 1. Overview 5 2. APRR 16 3. Other Assets 26 4. Outlook 42 5. Appendix 47 Note: Dollar amounts throughout the presentation are Australian Dollars unless stated otherwise 4
Slide 6: 1. Overview
1 O 1. Overview i
Slide 7: About MQA
About MQA An established global portfolio Macquarie Atlas Roads (MQA) is a global toll road operator and developer that was listed on the ASX on 25 January 2010 — Current market capitalisation: $673,995,4011 — ASX ranking: Top 200 MQA was created out of the restructure of Macquarie Infrastructur
Slide 8: MQA portfolio
MQA portfolio MQA’s toll road investments are located in France, UK, USA and Germany1 1. MQA owns various percentage stakes in these assets 7
Slide 9: Traffic and revenue performance
Traffic and revenue performance Strong financial performance relative to traffic driven by toll increases and cost efficiencies MQA Pro Forma Performance vs pcp MQA Pro Forma Performance vs pcp Year ended 31 December 20101 Six months ended 30 June 20111 5.4% 5.4% 4.5% 4.2% 2.1% (0.3%) Traffic Revenu
Slide 10: MQA structure
MQA structure MQA's structure is integral to its strategy MQA has no corporate level debt and A$25.5m 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-defa
Slide 11: Strategy & objectives
Strategy & objectives MQA to commence dividend payments1 Refinance Eiffarie (APRR Holdco) debt 2011/12 Explore and maximise value by way of sale or securing dividend Deliver g growth in the existing g portfolio p 1. Timing and amount of any future dividends will depend on the final terms of Eiffarie
Slide 12: Strategy & objectives (cont'd)
Strategy & objectives (cont’d) (cont d) Portfolio strategy will focus on enhancing the value of APRR (France) and Dulles Greenway (USA) — APRR is expected to deliver strong cash flows over the next few years — Dulles Greenway is expected to deliver cash flows over the medium to longer term M6 To
Slide 13: MQA value considerations
MQA value considerations APRR/Eiffarie is MQA’s largest and most valuable asset APRR + Other assets = MQA MQA structure lends itself to a sum of the parts valuation — All assets remain standalone with no recourse to MQA and no cross collateralisation or cross default APRR/Eiffarie represents opp
Slide 14: MQA value considerations (cont'd)
MQA value considerations (cont’d) (cont d) Remaining portfolio includes 5 assets with weighted average concession life remaining of 52 years1 Dulles Greenway — Cash accumulating until distribution tests passed — Concession life remaining of 45 years — Long-term debt protects cash flow M6 Toll &
Slide 15: Governance
Governance MQA has majority independent Boards and Macquarie Atlas Roads structure independent Chairmen Base fee calculated quarterly on market capitalisation Macquarie 100% Market capitalisation of MQA Base management fee MQA Up to A$1.0bn 2.00%: plus Resources Between A$1.0bn and A$3.0bn 1.25%;
Slide 16: MQA performance
MQA performance MQA has outperformed the S&P/ASX 300 MQA vs Benchmark performance Industrials Accumulation Index (the Benchmark) 2.25 20,000 by 149%1 since listing 2.00 18,000 Two performance fees have been calculated to date — 2010 performance fee: A$12.5m 16,000 1.75 — 2011 performance fee: A$50
Slide 17: 2. APRR
2 APRR 2.
Slide 18: APRR/Eiffarie
APRR/Eiffarie Concession 31 December 2032 (APRR, AREA) expiry 31 December 2042 (Maurice Lemaire) 31 December 2060 (ADELAC) Tolling 2011 - 2013: annual tariff increase of 85% CPI ex tobacco plus 0.5% under Contrats de Plan Post 2013: annual tariff increase of 70% of CPI ex tobacco as per co
Slide 19: APRR/Eiffarie – performance
APRR/Eiffarie – performance New managementt contracts N t t were agreed d with ith th the F French h St State t ffor th the period i d 2009 tto 2013 2013. These Th provide id for f additional capital expenditure of ~€500m with agreed tariff increases of 85% of inflation + 0.50% annually to 2013
Slide 20: APRR traffic analysis
APRR traffic analysis Traffic growth mainly reflecting continued strength of recovery in HGV Light vehicle traffic (which comprised 85% of total VKT in 2010) has returned to pre-2007 levels while heavy vehicles have not yet fully recovered Heavy vehicle performance is closely correlated to the i
Slide 21: APRR opex
APRR opex Toll station automation increasing with 105,600 electronic toll badges sold (+19%) in 1H 2011 vs 1H 2010 Toll collection by type Number of active electronic toll badges increased by almost 21% ith nearly with l 965 000 b 965,000 d badges iin circulation i l ti 16% 23% 130 toll plazas o
Slide 22: APRR/Eiffarie – financing
APRR/Eiffarie – financing APRR net debt of €6,443.7m (30 June 2011) Eiffarie consortium net debt of €3,650.2m1 (30 June 11) Recent Debt Issuance Debt Ratios Jan 11 APRR Net Debt/EBITDA = 4.71x – 6 yr €1,000m bonds at 245bp margin over mid-rate swaps APRR EBITDA/Interest = 4.26x – €50m private
Slide 23: APRR/Eiffarie – ownership structure
APRR/Eiffarie – ownership structure Minority Acquisition In June 2010, Eiffarie acquired an additional 13.7% interest Post-acquisition structure2 in APRR, increasing its stake to 95.2% Takeover offer and acquisition of remaining minorities subsequently commenced Other Macquarie MEIF MQA Curren
Slide 24: Eiffarie refinancing plan progressing
Eiffarie refinancing plan progressing Refinancing plan unchanged and on track Sufficient liquidity now exists to facilitate net debt reduction at Eiffarie from €3.6bn to ~€2.7bn APRR will remain active in the bond markets Status Actions Minority acquisition materially reduces refinancing risk. E
Slide 25: APRR/Eiffarie – refinancing considerations
APRR/Eiffarie – refinancing considerations Robust performance demonstrated throughout economic downturn and 2008 oil spike APRR’s resilient performance recognised by credit Eiffarie net debt expected to reduce from €3.6bn to markets ~€2.7bn by Q1 2012 Increased shareholding and fiscal consolid
Slide 26: APRR – traded bond yields
APRR – traded bond yields APRR well supported in the bond markets, with recent new issues oversubscribed APRR Bonds: Mid-Yield to Maturity 5 5% 5.5% Term to maturity: 5.0% 8 years 6 years 4.5% 4.0% % 4 years 3.5% 3.0% Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 €700m bond - 7.5% 2015 €1,
Slide 27: 3. Other Assets
3 Other Assets 3.
Slide 28: Dulles Greenway
Dulles Greenway Concession expiry 15 February 2056 Tolling Fixed toll increases until Dec 2012 From 2013 to 2020, escalate by greater of CPI +1%, Real GDP, or 2.8% By application to the SCC thereafter Ownership 50% estimated economic interest Length 22km Location / Strategic Located in
Slide 29: Dulles Greenway – traffic corridor
Dulles Greenway – traffic corridor The Dulles Greenway has two key competitors – Route 7 and Waxpool Rd Route 7 6 lanes Competing roads have received Improvements to junctions considerable capacity upgrades since 2005, and traffic signals g since 2006 diverting significant traffic away from the
Slide 30: Dulles Greenway – performance
Dulles Greenway – performance 12 months to December 2010: traffic -3.5%, toll revenue +1.8%; EBITDA +3.8% – Heavy winter conditions – over 50” snow – negatively impacted revenue and costs in the first quarter – New toll schedule implemented on 1 July 2010 – Internalisation of O&M will progressivel
Slide 31: Dulles Greenway – financing
Dulles Greenway – financing Debt 100% fixed rate bonds, amortisation schedule locked in until 2056. No refinancing requirement Greenway’s cash at 30 June 2011 totalled US$157.8m of which US$32.8m represents surplus cash which is currently subject to distribution lock-up aìääÉë=dêÉÉåï~ó=aÉÄí=j~íì
Slide 32: Dulles Greenway – distribution tests
Dulles Greenway – distribution tests Distributable cash will continue to accumulate at the asset until distribution tests are met aáëíêáÄìíáçå=qÉëí=eáëíçêó 90 80 70 enue (US$m) 60 Net Toll Revenue required to pass Minimum 50 9 9 x xx Coverage Ratio test (1 25x Total Debt Service)1 (1.25x Net Toll Re
Slide 33: Dulles Greenway outlook
Dulles Greenway outlook Internalised operations and maintenance will deliver long term benefits Internalised operations & maintenance commenced in May 2010 Management g team has continued to deliver improvements p in cost efficiencies One-off AIV settlement expense of ~US$2.9m (including assoc
Slide 34: M6 Toll
M6 Toll Concession expiry 31 January 2054 Tolling Market based tolling Ownership 100% Length 43 km Location / Bypasses the City of Birmingham Strategic and the M6 Motorway, one of the most Attraction congested motorways in the UK Significant industrial, housing and economic eco o c dedev
Slide 35: M6 Toll – performance
M6 Toll – performance 12 months to December 2010: traffic +3.2%, toll revenue +6.2%; EBITDA +7.3% – Increased toll prices effective from 1 March 2010 6 months to June 2011: traffic -7.6%, toll revenue -4.5%; EBITDA -5.8% – Toll increase from 1 March 2011 offset by weaker traffic largely due to U
Slide 36: M6 Toll traffic analysis
M6 Toll traffic analysis M6 Toll serves as a congestion relief road for the M6 M6 is benefiting from improved operations between J8 and J10a, and between J4 and J5 Traffic Variation 2011 on 2005 (April – July)1 20,000 15,000 10,000 5,000 0 2005 2006 2007 2008 2009 2010 2011 -5,000 -10,000 -15,000
Slide 37: M6 Toll traffic corridor
M6 Toll traffic corridor Approximately 2/3 of M6 Toll’s mainline traffic is M6 Toll Corridor long distance travel Evidence of local traffic resilience – Screenline traffic outperformed corridor traffic growth Long distance travel as measured in the corridor (M1/M6 combined counts) has reduced Le
Slide 38: M6 Toll looking forward
M6 Toll looking forward Medium term outlook likely to be mixed Hard Shoulder Running Macro trends of declining fuel sales and declining real wages suggest near term outlook is likely to remain subdued Construction works on the M6 in 2012/2013 Legend should benefit the M6 Toll traffic in those ye
Slide 39: M6 Toll – financing
M6 Toll – financing Di t ib ti Distributions Distribution of £15.1m to MQA during 2010 and a further £8.6m in February 2011 No further distributions are anticipated prior to the debt refinancing due to the recent traffic performance as well as the step ups in cash sweep % and interest rates Debt
Slide 40: Chicago Skyway
Chicago Skyway Concession expiry 24 January 2104 Tolling Set schedule from 2005 to 2017 (2011: ~17% increase for cars)) After 2017, tolls can escalate annually by greater of 2%, CPI, or nominal GDP per capita Ownership 22.5% (22.5% MIP; 55% Cintra) L Length th 12.5km, 12 5k majority j it e
Slide 41: Indiana Toll Road
Indiana Toll Road Concession expiry 29 June 2081 Tolling On 1 July 2010 tolls increased by approx. 10% From 1 July 2011 tolls will increase annually by the greater of 2% or the percentage increase of the CPI index and nominal GDP Ownership 25% (25% MIP; 50% Cintra) Length 253km, 253km limi
Slide 42: Warnow Tunnel
Warnow Tunnel Concession expiry 15 September 2053 Tolling Inflation linked when pre-tax equity IRR is between 17% 25% 17%-25% – if IRR <17%, tolls may rise at a rate higher than inflation – if IRR >25%, tolls remain fixed Toll increases subject to toll application audit by the Land Ministry of T
Slide 43: 4. Outlook
4 O 4. Outlook tl k
Slide 44: Outlook – portfolio performance
Outlook – portfolio performance APRR Outlook for the year remains positive albeit slowing traffic growth Remaining assets Portfolio revenue will continue to benefit from toll increases — Further toll increases scheduled on most roads in 2012 Traffic conditions in the US are likely to remain we
Slide 45: Outlook – Eiffarie refinancing
Outlook – Eiffarie refinancing The refinancing process is expected to be completed over the coming months Simple and sound credit story — Easyy to understand,, profitable p business — Strong track record demonstrating steady growth over the last 6 years in spite of economic shocks — Outlook for th
Slide 46: The road ahead
The road ahead APRR is key to releasing yield for MQA investors with remaining value in portfolio to contribute incremental value in medium to long term Jun 2011 Dec 2011 Jun 2012 Dec 2012 2010 3 3 APRR Minority Acquisition APRR €1.55bn bond issuance and liquidity Disciplined Capital Management 5.4%
Slide 47: Upcoming events
Upcoming events 21 October 2011: September 2011 quarter revenue and traffic release 23 January 2012: December 2011 quarter revenue and traffic release 24 February 2012: MQA Full Year Results Presentation 23 April 2012: March 2012 quarter revenue and traffic release April 2012: MQA Annual G
Slide 48: 5. Appendix
5 Appendix 5. A di
Slide 49: Registry Analysis
Registry Analysis1 Retail 10.07% Macquarie 16.52%2 Other Foreign Institutions 19.34% Lazard 14.29% Octavian 6.56% Other Australian Goldman Sachs Institutions 6.17% 27.05% 1. Register data as at 30 Jun 2011; substantial holdings as per most recent substantial holding notice 2. Macquarie’s principal h
Slide 50: Traffic and revenue performance
Traffic and revenue performance 12 months 12 months Change Quarter vs. pcp Asset 31 Dec 09 31 Dec 10 vs. pcp Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 APRR Light Vehicle VKT (millions) 17,609 17,953 2.0% Heavy Vehicle VKT (millions) 3,019 3,203 6.1% Total VKT (millions) 20,628 21,157 2.6% 1.6% 4.5%
Slide 51: Traffic and revenue performance (cont'd)
Traffic and revenue performance (cont’d) (cont d) 12 months 12 months Change Quarter vs. pcp Asset 31 Dec 09 31 Dec 10 vs. pcp Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Chicago Skyway Av Workday Traffic 46,311 43,476 (6.1%) Av Non-workday Traffic 49,493 48,312 (2.4%) Av All day Traffic 47,296 44,987
Slide 52: Proportionate earnings – by asset
Proportionate earnings – by asset Actual Proportionate Earnings split by asset for the 6 months ended 30 June 2011 Dulles Chicago Warnow 1 APRR Greenway M6 Toll Skyway ITR Tunnel Total A$m A$m A$m A$m A$m A$m A$m Operating revenue 252.3 16.0 44.4 6.9 20.7 3.9 344.3 Operating expenses (78.6) (4.9) (6
Slide 53: Debt maturity profile of assets
Debt maturity profile of assets Debt maturity profile of assets Year (as at 30 Jun 2011)1 Currency 2H 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020+ APRR/Eiffarie €m 24.7 529.8 4,104.4 1,115.3 1,329.0 422.1 1,391.0 714.0 504.2 211.0 Dulles Greenway US$m - 45 8 45.8 46 1 46.1 46 5 46.5 46 8 46.8
Slide 54: Asset debt metrics
Asset debt metrics D bt metrics Debt ti C Currency N tD Net bt Debt N tD Net bt / Debt EBITDA/I t t EBITDA/Interest DSCR L kU Lock-Up 2011 H d i Hedging (as at 30 Jun 2011)1 (Local m) EBITDA (x) (x) (x) (x) (%) APRR/Eiffarie2 € 10,093.9 7.43x 4.26x 1.87x 1.25x 94.1% Dulles Greenway3 US$ 844.8 16.48x
Slide 55: Debt hedging profile
Debt hedging profile Proportionally consolidated using 30 June 2011 foreign exchange rates 100.0% 90.0% 80.0% 70 0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 54
Slide 56: Asset debt ratings
Asset debt ratings Asset debt ratings Rating Rating Agency Rating since (as at Jun 2011) APRR1 BBB- Standard and Poor’s June 2009 Baa3 Moody’s Moody s August 2008 Dulles Greenway2 BBB- Standard and Poor’s September 2009 Ba1 Moody’s June 2011 BBB- Fitch July 2010 Chicago Skyway3 AA+ Standard and Poor
Slide 57: Proportionally consolidated performance
Proportionally consolidated performance Actual A t l Pro forma P f Actual A t l (A$m) 6m to 30 Jun 11 6m to 30 Jun 10 Change (%) 5m to 30 Jun 10 Operating revenue 344.3 330.4 4.2% 326.6 Operating expenses (96.3) (95.2) 1.2% (92.8) EBITDA from road assets 248.0 235.2 5.4% 233.8 Asset maintenance cape
Slide 58: MQA statutory accounts
MQA statutory accounts Statutory accounting MQA consolidates the results and balances of its controlled asset (M6 Toll) MQA equity accounts its non-controlled assets (APRR, Dulles Greenway, Chicago Skyway, Indiana Toll Road, Warnow Tunnel) Equity accounting Initially recognise assets at acquis
Slide 59: Consolidated profit & loss account
Consolidated p profit & loss account Statutory accounts – 6 months ended 30 June 2011 Non- N MQA Total T t l MQA T Total t l MQA controlled 6m to Period to (A$m) Corporate M6 Toll assets 30 Jun 2011 30 Jun 2010 Total revenue 0.6 44.5 - 45.1 48.1 Financing costs - (51.2) - (51.2) (49.9) Other operati
Slide 60: Consolidated balance sheet
Consolidated balance sheet Statutory accounts – as at 30 June 2011 Non- N MQA controlled MQA Total MQA Total (A$m) Corporate M6 Toll assets 30 Jun 2011 31 Dec 2010 Current assets 36.3 37.5 - 73.9 75.4 Investments in associates - - 923.6 923.6 931.1 Property, plant and equipment - 747.9 - 747.9 773.2
Slide 61: Management information report vs Statutory accounts – overview
Management information report vs Statutory accounts – overview Proportionally consolidated financial performance Statutory performance Aggregation of operating results of proportionate interests in consolidated other toll road asset results M6 Toll results consolidated, all toll road assets included
Slide 62: Management information report v Statutory accounts – reconciliation
Management information report v Statutory accounts – reconciliation 6 months ended 30 June 2011 A$m MQA proportionate earnings from road assets per Management Information 86.2 Report (MIR) Corporate net interest income 0.6 C Corporate net expenses (29 9) (29.9) Proportionate earnings per MIR 56.8 Le
Slide 63: MQA cash flow summary
MQA cash flow summary Available cash A$m Opening balance – 1 January 2011 19.1 MQA was net operating cash flow positive Distribution from M6 Toll 13.7 for 1H 2011 Cash inflow from assets 13.7 Unlikely to receive further distributions Interest on corporate cash balances 0.6 from assets before Eif
Slide 64: Foreign Exchange Rates
Foreign Exchange Rates Spot foreign exchange rates 30 June 2011 Euro 0.7398 Pound Sterling 0.6686 United States Dollar 1.0732 The spot exchange rates in this table are the exchange rates that have been applied to the translation of proportionate net debt as at 30 June 2011. Quarter ended Quarter end
Slide 65: Macro factors – fuel deliveries
Macro factors – fuel deliveries Fuel consumption trends between France, US and UK have diverged since 2008 Motor vehicle fuel deliveries1 105.0 100.0 95.0 90.0 85.0 un 04 un 05 un 06 un 07 un 08 un 09 un 10 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Jun 11 Ju Ju Ju Ju Ju Ju Ju France US
Slide 66: Macro factors – real wages
Macro factors – real wages UK consumer purchasing power has steadily declined since 2008 Real wages 105 0 105.0 100.0 95.0 90.0 85.0 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 France US (Private) UK (CPI Adj.) UK (RPI Adj.) 65
Slide 67: Credit health check
Credit health check Corporates perceived to be in better shape relative to sovereigns and financials Credit Default Swap Indices 3 5% 3.5% 3.0% 2 5% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Senior1 Financial2 Sovereign3 Source: Bloomberg 1. Senior Index (Markit
Macquarie Atlas Roads — Investor Presentation (August 2011) on 6ix