Atlas Arteria · ASX:ALX
Atlas Arteria — Macquarie Atlas Roads — Investor Presentation (August 2012)
73 slides from Atlas Arteria's investor presentation, Aug 31, 2012
Slide 1: ASX Release: September 2012 Investor Presentation
Macquarie Atlas Roads Limited Macquarie Atlas Roads International Limited ACN 141 075 201 EC43828 No. 1 Martin Place Telephone 612 8232 3333 Rosebank Centre SYDNEY NSW 2000 Facsimile 612 8232 4713 11 Bermudiana Road GPO Box 4294 Internet: www.macquarie.com/mqa Pembroke HM08 SYDNEY NSW 1164 DX 10287
Slide 2: Macquarie Atlas Roads Investor Presentation September 2012
MACQUARIE ATLAS ROADS INVESTOR PRESENTATION SEPTEMBER 2012 1
Slide 3: Disclaimer
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 manager/adviser of MA
Slide 4: Disclaimer
Disclaimer Hong 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 public
Slide 5: Agenda
Agenda 1. Overview 5 2. APRR 15 3. Other Assets 29 4. Dividends 40 5. Outlook 46 Appendix 49 4
Slide 6: 1. Overview
1. Overview
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: $665,158,6961 – 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 Solid financial performance despite traffic decline driven by toll increases and cost efficiencies MQA Pro Forma Performance vs pcp MQA Pro Forma Performance vs pcp Year ended 31 December 20111 6 months ended 30 June 20121 4.0% 3.0% 3.5% (0.7%) 1.4% (1.9%) Traffic Rev
Slide 10: MQA structure
MQA structure MQA's structure is integral to its strategy MQA has no corporate level debt and A$12.1m 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 Manage debt maturities over time De-risk assets Explore and maximise value by way of sale or securing dividend Deliver growth in the existing portfolio Holding Structure Individual asset risk quarantined from remaining portfolio and MQA 1. Bas
Slide 12: Strategy & objectives (cont'd)
Strategy & objectives (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 Remaining asse
Slide 13: MQA value considerations
MQA value considerations MQA is an investment vehicle for APRR/Eiffarie and Dulles Greenway 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 dividend stream — Exclud
Slide 14: Governance
Governance MQA has majority independent Boards and independent Chairmen MQA structure Base fee calculated quarterly on market capitalisation Macquarie Market capitalisation Base management fee Resources Up to A$1.0bn 2.00% plus (Staff, premises, IT, etc) Between A$1.0bn and A$3.0bn 1.25% plus 100%
Slide 15: MQA performance
MQA performance MQA has outperformed its Benchmark by MQA vs Benchmark 113% since listing1 A$2.25 20.0 Two performance fees have been calculated to date — 2010 performance fee: A$12.5m A$2.00 18.0 — 2011 performance fee: A$50.1m 16.0 These fees are payable in three equal annual A$1.75 instalment
Slide 16: 2. APRR
2. APRR
Slide 17: Eiffarie/APRR
Eiffarie/APRR Concession 31 December 2032 (APRR, AREA) expiry 31 December 2060 (ADELAC) 31 December 2068 (Maurice Lemaire Tunnel) Tolling 2011-13: annual tariff increase of 85% CPI ex tobacco plus 0.5% under Contrats de Plan Post 2013: annual tariff increase of 70% CPI ex tobacco as per co
Slide 18: APRR performance
APRR performance Robust performance demonstrated through economic downturn and oil spikes APRR EBITDA1 (€m), average French diesel price2 and French GDP3 1.50 1,399 5.0% 1,326 1,244 1,265 1,208 1,068 974 2.5% diesel price (€/L) Average French French GDP (%) 1.25 0.0% 1.00 -2.5% 0.75 -5.0% 2005 2006
Slide 19: APRR performance (cont'd)
APRR performance (cont’d) 1H 2012 traffic impacted by external factors including high fuel prices, poor weather and weak economic conditions 6 months to June 20121 — Traffic: -1.6%; Toll revenue: +0.5%; EBITDA: +3.3% (€693.8m) 12 months to December 20111 — Traffic: +1.6%, Toll revenue: +4.2%; EB
Slide 20: APRR traffic analysis
APRR traffic analysis 1H 2012 LV traffic down 1.1% vs pcp 1H 2012 HV traffic down 3.8% vs pcp Light vehicle traffic which made up >80% of In addition to the factors that affected light total VKT was adversely impacted by a vehicle traffic, heavy vehicle levels were also number of external factor
Slide 21: APRR traffic analysis
APRR traffic analysis Continued LV recovery. HV closely correlated to French industrial production Light vehicle traffic (which comprised 85% of total VKT in 2011) is above pre-recession levels while the recovery in heavy vehicle traffic has been impacted by the challenging economic climate APRR
Slide 22: APRR operations
APRR operations Opex down 4.2% vs 1H 2011 1H operating expenses and EBITDA margin EBITDA margin above 70.0% 70.6% 68.8% 67.7% 67.7% 69.0% Decrease in operating expenses primarily as a result of lower staff costs as well as purchases and external charges Operational taxes decreased as a result of
Slide 23: APRR capital expenditure
APRR capital expenditure Since 2006, €2.4bn has been spent to grow, improve and maintain the network APRR historical capital expenditure (€m) 2011 104 123 54 2010 88 104 188 2009 84 171 159 2008 92 303 81 2007 99 343 24 2006 91 215 45 0 50 100 150 200 250 300 350 400 450 500 Maintenance Additional i
Slide 24: APRR cash generation
APRR cash generation APRR generates substantial cash flow in excess of profit Surplus cash to fund capex and debt maturities (supplemented by bond issues) Group expected to naturally deleverage over time Tax grouping provides additional benefit from deductions at Eiffarie APRR profit vs operat
Slide 25: Eiffarie/APRR ownership structure
Eiffarie/APRR ownership structure Minority acquisition Post-acquisition structure2 June 2010, Eiffarie acquired an additional 13.7% Other Macquarie interest in APRR, increasing its stake to 95.2% MQA MEIF Managed Funds Takeover offer and acquisition of remaining minorities 38.87% 25.75% 35.38% s
Slide 26: Eiffarie/APRR refinancing plan completed
Eiffarie/APRR refinancing plan completed Successful outcome achieved against challenging backdrop Eiffarie debt reduction from €3.8bn to €2.8bn — APRR dividend of €1.0bn in January 2012 from accumulated retained earnings (incl. 2011 profit) €3.5bn bank facilities secured to replace debt at Eiffa
Slide 27: Eiffarie/APRR financing
Eiffarie/APRR financing Eiffarie/APRR is in a strong liquidity position and has no significant debt maturing in the short term As at 30 June 2012 Cash Gross debt Net debt Eiffarie/APRR2 €1,011.9m (+ €720m undrawn RCF) €10,612.3m €9,600.4m Eiffarie/APRR Debt Maturity Profile (€m)1 5,000 4,142 4,000 3
Slide 28: Eiffarie/APRR financing
Eiffarie/APRR financing APRR well supported in bond markets, with recent new issues oversubscribed APRR Bonds: Mid-Yield to Maturity 6.0% 5.0% 4.0% 2,765 3.0% 2.0% 1.0% 0.0% Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 €700m - 7.5% 2015 €1,000m - 5.0% 2017 €500m - 4.875% 2019 €500m - 4.375% 2016
Slide 29: APRR cash flow to MQA
APRR cash flow to MQA Current structure is a legacy of original acquisition in 2006 and CNA debt terms Simplified holding structure1 MQA 19.4% of free cash flow HoldCo debt — Margin of 300bps Eiffarie — Cash sweep: 25% free cash flow (HoldCo debt) APRR distributions restricted to profit 100% profit
Slide 30: 3. Other Assets
3. Other Assets
Slide 31: Dulles Greenway
Dulles Greenway Concession expiry 15 February 2056 Fixed toll increases until 2012 From 2013 to 2020, 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 Located in Loudoun County Location
Slide 32: Dulles Greenway – performance
Dulles Greenway – performance 1H 2012 traffic, revenue and EBITDA were all higher than pcp as a result of higher tolls, limited toll elasticity and a milder winter 6 months to June 2012 — Traffic: +0.5%; Toll revenue: +8.6%; EBITDA: +15.9% (US$28.9m) 12 months to December 2011 — Traffic: -2.6%;
Slide 33: Dulles Greenway – traffic corridor
Dulles Greenway – traffic corridor Dulles Greenway well placed to provide good service levels as corridor develops The Dulles Greenway has two key competitors – Route 7 and Waxpool Rd Competing roads have received considerable Dulles Greenway corridor capacity upgrades since 2005, diverting sign
Slide 34: Dulles Greenway – looking forward
Dulles Greenway – looking forward Dulles Corridor Metrorail Project expected to improve accessibility and further stimulate economic and demographic development in areas served 23 mile extension of existing Metrorail system by Metropolitan Washington Airports Authority (MWAA) Scheduled to open:
Slide 35: 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) 2011 opex includes non-recurring legal expenses of US$0.7m — In addition a non-recurring expense of US$2.0m re
Slide 36: Dulles Greenway – financing
Dulles Greenway – financing Debt 100% fixed rate bonds, amortisation schedule locked in until 2056 No refinancing requirements Dulles Greenway Debt Maturity Profile (US$m) 200 650 150 600 100 50 54 57 61 62 63 62 61 60 55 634 10 8 50 30 16 49 50 50 48 45 34 33 17 20 - 2012 2013 2014 2015 2016 2017 2
Slide 37: M6 Toll
M6 Toll Concession expiry 31 January 2054 Tolling Market based tolling Ownership 100% Length 43 km Bypasses the City of Birmingham and the M6 motorway, one of the most Location / congested motorways in the UK Strategic Attraction Significant industrial, housing and economic development o
Slide 38: Chicago Skyway
Chicago Skyway Concession expiry 24 January 2104 Set schedule from 2005 to 2017 – 2011: ~17% increase for cars 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 Locat
Slide 39: Indiana Toll Road
Indiana Toll Road Concession expiry 29 June 2081 Tolls increase annually on 1 July by the greater of 2%, % increase of the CPI index or nominal GDP per capita Tolling State subsidised ‘toll freeze’ for passenger vehicles using ETC scheduled to remain in place until 2016 Ownership 25% (25% MI
Slide 40: Warnow Tunnel
Warnow 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 Land Minist
Slide 41: 4. Dividends
4. Dividends
Slide 42: Dividend framework
Dividend framework Based on current outlook, MQA dividends 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 capital r
Slide 43: 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 Quantum of any APRR dividends to Eiffarie for the remainder of 2012 to be limited to profit accrued during
Slide 44: 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 Timing of APRR dividends to Eiffarie: — APRR typically pays dividends in June and December each year — June
Slide 45: Dividend considerations
Dividend considerations Dividends from MQA are subject to a number of factors APRR operating performance APRR’s credit rating Satisfaction of debt covenants at APRR and distribution tests at Eiffarie Exchange rates: AUD/EUR Meeting corporate costs and retaining appropriate capital reserve
Slide 46: Simplified distribution mechanics
Simplified distribution mechanics Cash flow waterfall Eiffarie/Financière Eiffarie APRR distribution A add + APRR tax instalments to Financière Eiffarie B less – Financière Eiffarie tax payments to State C less – Eiffarie net interest D less – Other1 E equals = Distributable cash F=A+B–C–D–E less –
Slide 47: 5. Outlook
5. Outlook
Slide 48: 2012 Outlook
2012 Outlook APRR/Eiffarie Some negative growth in traffic may continue for the rest of the year Revenue and EBITDA growth expected to be positive for the full year Minority acquisition process likely to conclude 2H 2012 Economic conditions in Europe create uncertainty over near term Other p
Slide 49: Upcoming events
Upcoming events Upcoming events 23 October 2012 — September 2012 quarter revenue and traffic release January 2013 — December 2012 quarter revenue and traffic release February 2013 — Full year results presentation April 2013 — March 2013 quarter revenue and traffic release For more informatio
Slide 50: Appendix
Appendix
Slide 51: Register Analysis
Register Analysis1 Retail 8.38% Macquarie 2 21.75% Other Foreign Institutions 25.92% Lazard 13.51% Other Australian Institutions 30.44% 1. Register data and substantial notices as at 31 July 2012. For substantial notices prior to 3 July 2012, the % of issued securities shown has been adjusted to ref
Slide 52: 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 acqui
Slide 53: Consolidated profit & loss account
Consolidated profit & loss account Statutory accounts – 6 months ended 30 June 2012 MQA Total MQA Total MQA Non-controlled 6 months ended 6 months ended A$m Corporate M6 Toll assets 30 Jun 2012 30 Jun 2011 Total revenue and other income 0.4 42.7 - 43.1 45.1 Financing costs - (51.7) - (51.7) (51.2) M
Slide 54: Consolidated balance sheet
Consolidated balance sheet Statutory accounts – as at 30 June 2012 MQA Total MQA Total MQA Non-controlled At as As at A$m Corporate M6 Toll assets 30 Jun 2012 31 Dec 2011 Current assets 17.8 46.9 - 64.7 64.0 Investments in associates - - 706.9 706.9 753.4 Property, plant and equipment - 739.9 - 739.
Slide 55: Proportionally consolidated performance
Proportionally consolidated performance Actual Pro forma Actual 6 months ended 6 months ended 6 months ended A$m 30 Jun 12 30 Jun 111,2 Change (%) 30 Jun 112 Operating revenue 330.8 326.2 1.4% 344.2 Operating expenses (86.0) (89.7) (4.2%) (95.3) EBITDA from road assets 244.8 236.4 3.5% 248.9 Asset m
Slide 56: MQA cash flow summary
MQA cash flow summary Available cash A$m Opening balance – 1 January 2012 17.3 Management fees paid reflect security price Distribution from assets - — May be applied to a subscription for new MQA securities, subject to agreement between Interest on corporate cash balances 0.3 MQA’s independent di
Slide 57: Statutory accounts vs Management Information Report
Statutory accounts vs Management Information Report Statutory result for the period Proportionally consolidated financial performance M6 Toll results consolidated. Non-controlled toll road asset results Aggregation of operating results of proportionate interests in all toll included in share of loss
Slide 58: Statutory accounts vs Management Information Report (cont'd)
Statutory accounts vs Management Information Report (cont’d) Statutory cash flow statement Aggregated cash flow statement MQA owns 100% of the M6 Toll and consequently consolidates the The cash flows and closing cash balance presented in the MIR road operator company group cash flows relating to thi
Slide 59: Reconciliation – statutory results to proportionate earnings
Reconciliation – statutory results to proportionate earnings 6 months ended 6 months ended A$m 30 Jun 2012 30 Jun 2011 Loss attributable to MQA security holders (75.2) (106.4) M6 Toll related adjustments: less Non-cash financing costs 15.5 21.2 less Depreciation and amortisation net of maintenance c
Slide 60: Reconciliation – cash flows
Reconciliation – cash flows 6 months ended 6 months ended A$m 30 Jun 2012 30 Jun 2011 Net statutory operating cash flows 26.7 30.4 M6 Toll related adjustments less Toll revenue received (49.2) (51.5) less Interest and other income received (1.5) (1.4) add Net indirect taxes paid 8.0 9.2 add Payments
Slide 61: Reconciliation – cash balances
Reconciliation – cash balances As at As at A$m 30 Jun 2012 30 Jun 2011 Statutory closing cash balance 59.0 65.7 less M6 Toll closing cash balance (45.4) (36.2) equals Closing cash balance per MIR 13.6 29.4 60
Slide 62: Traffic and revenue performance
Traffic and revenue performance Quarter vs pcp Change Asset 2011 2010 vs pcp Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 APRR Light Vehicle VKT (m) 18,203 17,953 1.4% 3.4% (1.6%) 0.5% 4.2% (0.2%) (2.0%) Heavy Vehicle VKT (m) 3,297 3,203 2.9% 7.5% 3.6% 2.2% (1.3%) (2.4%) (5.2%) Total VKT (m) 21,500 21,
Slide 63: Traffic and revenue performance
Traffic and revenue performance Quarter vs pcp Change Asset 2011 2010 vs pcp Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Chicago Skyway Av All day Traffic 42,066 44,987 (6.5%) (6.5%) (5.5%) (7.6%) (6.2%) (0.7%) 1.1% Av Daily Rev (US$) 183,713 162,285 13.2% 12.7% 14.0% 12.3% 13.9% 1.5% 4.9% Indiana Tol
Slide 64: Proportionate earnings – by asset
Proportionate earnings – by asset Actual Proportionate Earnings split for the 6 months ended 30 June 2012 Dulles Chicago Indiana Warnow Total A$m APRR1 Greenway M6 Toll Skyway Toll Road Tunnel Operating revenue 237.6 17.6 42.7 7.2 22.2 3.5 330.8 Operating expenses (70.2) (3.5) (6.0) (0.9) (4.3) (1.1
Slide 65: Debt maturity profile of assets
Debt maturity profile of assets As at 30 Jun 20121 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021+ APRR/Eiffarie €m 504.0 348.0 1,115.3 1,348.4 954.4 4,141.7 1,211.0 504.2 4.4 219.7 Dulles Greenway US$m - 49.2 49.5 49.9 47.5 44.8 34.5 33.0 17.5 653.8 M6 Toll £m - - - 1,010.8 - - - - - - Chicago S
Slide 66: Asset debt metrics
Asset debt metrics As at 30 Jun 20121 Gross Debt Cash Net Debt Net Debt/EBITDA EBITDA/Interest DSCR Lock-Up Hedging APRR/Eiffarie2 €m 10,612.3 1,011.9 9,600.4 6.78x 3.84x 2.75x 1.60x 97.8% − APRR €m 7,861.6 858.8 7,002.8 − Eiffarie €m 2,750.7 153.1 2,597.6 Dulles Greenway3 US$m 979.7 126.0 853.7 15.
Slide 67: Asset debt ratings
Asset debt ratings Rating Rating Agency Rating since1 APRR2 BBB- Standard and Poor’s June 2009 Baa3 Moody’s August 2008 Dulles Greenway3 BBB- Standard and Poor’s September 2009 Ba1 Moody’s June 2011 BBB- Fitch July 2010 Chicago Skyway4 AA- Standard and Poor’s November 2011 Aa3 Moody’s N/A The debt o
Slide 68: Eiffarie loan facility – key terms
Eiffarie loan facility – key terms Item Terms Facility amount €2.765bn Maturity February 2017 Margin 300bps Step-up Year 4: 50bps Year 5: 50bps Interest period Six months Cash sweep Years 1–3: 25% Year 4: 75% Year 5: 100% Subject to a maximum debt balance reducing each six months − Starting from €
Slide 69: APRR revolving credit facility – key terms
APRR revolving credit facility – key terms Item Terms Facility amount €0.720bn Maturity February 2017 Margin 150bps Step-up 50bps if APRR is rated non-investment grade by S&P, Moody’s or Fitch Utilisation fee 50bps p.a. on total drawn facility amount Commitment fee 35% of margin Financial covenants
Slide 70: Foreign exchange rates
Foreign exchange rates As at Spot foreign exchange rates 30 Jun 2012 Euro 0.8093 Pound Sterling 0.6538 United States Dollar 1.0240 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 2012. Quarter ended Quarte
Slide 71: EU leading indicators
EU leading indicators Confidence indices reflecting general macro concerns French Business and Consumer Confidence1 France Manufacturing PMI2 120.0 70.0 100.0 60.0 50.0 80.0 40.0 60.0 30.0 40.0 20.0 20.0 10.0 - - Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun
Slide 72: 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 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 France US UK Sources France: Union Française des Industries Pétrolières
Slide 73: Macro factors – real wages
Macro factors – real wages UK consumer purchasing power has steadily declined since 2008 Real wages1 105.0 100.0 95.0 90.0 85.0 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 France US (Private) UK (CPI Adj.) UK (RPI Adj.) Sources France: INSEE US: US Bureau of Labour Statistics UK:
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