Atlas Arteria · ASX:ALX
Atlas Arteria — Macquarie Atlas Roads — Investor Presentation (September 2015)
58 slides from Atlas Arteria's investor presentation, Sep 2, 2015
Slide 1: ASX Release: Investor Presentation – September 2015
Macquarie Atlas Roads Limited Macquarie Atlas Roads International Limited ACN 141 075 201 EC43828 Level 7, 50 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 11
Slide 2: Macquarie Atlas Roads Investor Presentation September 2015
Macquarie Atlas Roads Investor Presentation September 2015
Slide 3: Important notice and disclaimer
Important notice and 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
Slide 4: Important notice and disclaimer
Important notice and disclaimer 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 registration statement ha
Slide 5: Table of Contents
Table of Contents 01 Overview 4 02 APRR 9 03 Dulles Greenway 28 04 Other Assets 34 05 Distributions 38 Appendix 44 MACQUARIE ATLAS ROADS PAGE 3
Slide 6: Overview
1 Overview MACQUARIE ATLAS ROADS
Slide 7: MQA overview
MQA overview Global toll road operator and developer listed on ASX (Top 200) with market capitalisation of A$1.8bn1 MQA 20.14% 50.0%2 Various % M6 Toll Dulles APRR Greenway Chicago Skyway Warnow Tunnel 2,276 km motorway network in 22 km commuter route into Located in US and Europe Eastern Fran
Slide 8: MQA portfolio
MQA portfolio MQA’s toll road investments are located in France, UK, USA and Germany (22.5%) (50%)1 (100%)2 (20.14%) (70%) 1. Estimated economic interest. 2. MQA holds 100% of the ordinary equity in M6 Toll, however the beneficial interest is 0% as MQA is no longer exposed to any significant variabl
Slide 9: MQA value proposition
MQA value proposition Distributions underpinned by operational performance MQA Distributions (cps) Distribution Capital Guidance1 growth growth Distributions 18.02 16.0 13.2 Distribution growth underpinned by operational growth and capital structure optimisation Undistributed asset level cash
Slide 10: 1H15 snapshot
1H15 snapshot 1H15 delivered an improved performance across the portfolio Traffic1 Revenue1 EBITDA1 +2.3% +3.4% +8.4% 1H15 Statutory results Profit from operations: A$40.3m (1H14: A$67.9m loss) Portfolio highlights Strong performance reflective of higher traffic volumes on APRR and Dulles Greenw
Slide 11: APRR
2 APRR MACQUARIE ATLAS ROADS
Slide 12: APRR overview
APRR overview Concession 31 January 2035 (APRR) expiry 30 September 2036 (AREA) 31 December 2060 (ADELAC) 31 December 2068 (Maurice Lemaire Tunnel) Tolling 2016-2023: annual tariff increase (February), linked to CPI (ex. Tobacco). Refer to slide 26 Post 2023: annual tariff increase of 70
Slide 13: APRR concessions
APRR concessions APRR comprises four concessions APRR Concession Expiry: 2035 Road Length: 1,854km AREA Concession Expiry: 2036 Road Length: 394km ADELAC (50%) Concession Expiry: 2060 Road Length: 19km ML TUNNEL Concession Expiry: 2068 Road Length: 11km MACQUARIE ATLAS ROADS PAGE 11
Slide 14: APRR snapshot
APRR snapshot Growth maintained through economic cycles APRR EBITDA (€m)1 and France GDP growth (%)2 €1,750m 3.0% 1,520 €1,500m 1,428 1,475 2.0% 1,399 1,326 1,244 1,265 €1,250m 1,208 1.0% €1,000m 0.0% €750m (1.0%) €500m 1,068 (2.0%) 888 924 9413 974 841 €250m (3.0%) €0m (4.0%) 2001 2002 2003 2004 20
Slide 15: French macro environment
French macro environment Lending growth to non-financial corporations since mid 2014 implies expansion of business activity Loans to non-financial corporations (annual growth rate)1 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% (1.0%) Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 1. Bank of France: August 2015;
Slide 16: APRR traffic analysis
APRR traffic analysis 6 months to 30 June 2015 Revenue and traffic analysis 1H15 Total traffic 10.4bn VKT, up 2.2% vs pcp – LV traffic up 2.3% 34% – HV traffic up 2.0% 16% LV 12 months to 31 December 2014 Traffic HV Revenue 3% Other Total traffic 21.7bn VKT, up 1.6% vs pcp 84% – LV traffic up 1.
Slide 17: APRR traffic correlation
APRR traffic correlation Light vehicle traffic remains correlated to real household disposable income Heavy vehicle traffic remains correlated to French manufacturing and imports APRR light vehicles and economic indicators1,2 APRR heavy vehicles and economic indicators1,2 110 110 105 105 100 100 95
Slide 18: APRR performance
APRR performance Continued revenue growth despite absence of 2015 toll increase 6 months to 30 June 2015: Traffic: +2.2%; Revenue: +2.7%; EBITDA: +8.3%2 Financial performance (€m)1 Quarterly traffic performance (VKTm) 74.9%2 7,000 69.2% 70.0% 70.3% 70.7% 2,099.2 2,149.2 6,000 2,021.6 2,038.6 623.8
Slide 19: APRR operations
APRR operations Operating expenses (ex. operating taxes) have decreased since 2006 Headcount (FTE)1 at 30 June 2015 was 3,502 (December 2014: 3,534) €800m 80.0% 69.2% 70.0% 70.3% 70.7% 67.0% 67.8% 68.0% 68.4% 64.0% €600m 60.0% 2 3 3 232 229 231 236 240 264 258 275 292 €400m 40.0% 153 162 149 139 1
Slide 20: APRR ongoing initiatives
APRR ongoing initiatives Ongoing initiatives to automate toll collection • Automated transaction reached 96.2% in 1H15 with ETC accounting for over 55% of total transactions – Automation rate steadily improved since acquisition • Continuing commitment to cost control and operational improvement Toll
Slide 21: APRR cash flow to MQA
APRR cash flow to MQA Potential to improve overall financing terms over time Simplified holding structure MQA HoldCo debt 20.14% of free cash flow – Margin 100bps Eiffarie HoldCo swap until June 2018 – Fixed principal repayments1 ‒ Average of €3,296m swapped – Five year term with two extensions (Hol
Slide 22: APRR free cash flow
APRR free cash flow FE distributions, and therefore MQA 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 at the APRR level 100% of APRR profit is distributed to Eiffari
Slide 23: APRR financing costs
APRR financing costs Opportunity for continued reduction in financing costs €275m loan facility signed with European Investment Bank (EIB) in June 2015 (7 year, EIB rate +0.38%)1 – €170m drawn on 30 June 2015 APRR rated BBB+ (Stable outlook) by both S&P and Fitch Sustainable debt maturity prof
Slide 24: APRR bond issues
APRR bond issues Opportunity for continued reduction in financing costs APRR bonds: mid-yield to maturity1 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 €1,000m - 5.0% 2017 €500m - 4.875% 2019 €500m - 4.375% 2016 €500m - 5.125% 2018 €500m -
Slide 25: APRR capital expenditure
APRR capital expenditure Since 2006, ~€3.5bn has been spent to grow, improve and maintain the network €600m €500m 24 81 €400m 65 45 159 €300m 187 93 343 44 303 27 54 69 215 €200m 75 240 171 168 172 165 104 123 66 139 €100m 100 110 122 115 102 115 108 78 94 93 92 57 €0m 2003 2004 2005 2006 2007 2008
Slide 26: APRR capital projects
APRR capital projects Continue to focus on maintenance and expansion of the existing network Capital expenditure guidance (real as at Dec 2014) – 2015-2019: average €430m p.a. (includes 2014-2018 management contract residual spend) – 2020-2035: average €180m p.a. Management Contract A. A6 at Auxer
Slide 27: APRR concession contract amendments
APRR concession contract amendments APRR and AREA concession contracts amended via formalised agreement with the French State Amendments formalised 23 August 2015. Significant measures include: Stimulus Package & Supplemental toll Changes to key concession extension adjustments contractual terms
Slide 28: APRR toll formulas
APRR toll formulas Toll formulas 2016-2023 • Compensation for the 2013 land tax increase via supplemental toll increases over 2016-2018; such supplements will be in addition to the existing contractual toll increase formula Supplemental toll increases (“X”) Applicable toll formula 2016 2017 2018 APR
Slide 29: APRR/Eiffarie ownership structure
APRR/Eiffarie ownership structure Ownership Ownership structure July 2014 – MQA acquired an additional 1.41% interest in MAF2, increasing its stake to 40.29% Third Party Other Macquarie MQA Investors Managed Funds – Represents a 0.71% indirect interest in APRR, increasing MQA’s interest to 20.14%
Slide 30: Dulles Greenway
3 Dulles Greenway MACQUARIE ATLAS ROADS
Slide 31: Dulles Greenway overview
Dulles Greenway overview Concession 15 February 2056 expiry 2014-2020, tolls escalate by greater of: – CPI +1% – Real GDP – 2.8% Tolling By application to the SCC thereafter Current tolls for mainline plaza two-axle vehicles (effective March 2015): – Peak: US$5.20 – Off-peak: US$4.30 Ownersh
Slide 32: Dulles Greenway performance
Dulles Greenway performance Higher traffic volumes and toll increases have led to consistent growth in EBITDA Improving traffic trends evident since 2012 SCC review completed September 2015, supporting Dulles Greenway tolls Distribution outlook: no distributions expected before 2019 EBITDA (US
Slide 33: Dulles Greenway traffic corridor
Dulles Greenway traffic corridor Corridor traffic expected to continue to increase with regional growth The Dulles Greenway has two key competitors – Route 7 and Waxpool Rd Competing roads have received considerable capacity Dulles Greenway corridor upgrades since 2005, diverting significant tra
Slide 34: Dulles Greenway corridor
Dulles Greenway corridor Demographic factors expected to progressively increase congestion in corridor Loudoun county continues to be the fastest growing county in northern Virginia, attracting over 40% of new housing starts in the region in 2014 Continued traffic growth in off-peak periods Corr
Slide 35: Dulles Greenway financing
Dulles Greenway financing Debt 100% fixed rate bonds, amortisation schedule locked in until 2056 No refinancing requirements Dulles Greenway debt maturity profile (US$m) 500 250 Maturity profile for external debt as at 30 June 2015 (excl. future capitalised interest) Total future current/capitalis
Slide 36: Other Assets
4 Other Assets MACQUARIE ATLAS ROADS
Slide 37: Chicago Skyway
Chicago Skyway Concession • 24 January 2104 expiry Set schedule from 2005 to 2017 After 2017, tolls can escalate annually by the greater of 2%, CPI or nominal GDP per capita Tolling Current tolls (effective January 2015): – Light vehicles: US$4.50 – Heavy vehicles (off peak): US$3.60 per axle1
Slide 38: Warnow Tunnel
Warnow Tunnel Concession 15 September 2053 expiry Tolling linked to pre-tax equity IRR – IRR <17%: tolls may rise at a rate higher than inflation – IRR 17%-25%: tolls linked to inflation – if IRR >25%: tolls remain fixed Tolling Toll increases subject to toll application audit by the Land Mini
Slide 39: M6 Toll
M6 Toll Concession 31 January 2054 expiry Tolling Market based tolling Ownership 100%1 Length 43 km Bypasses the city of Birmingham and the M6 motorway, one of the most congested Location / motorways in the UK Strategic attraction Significant industrial, housing and economic development
Slide 40: Distributions
5 Distributions MACQUARIE ATLAS ROADS
Slide 41: MQA distributions
MQA distributions 2H15 distribution of 10.0 cps Declared 15 September 2015 with estimated payment date of 30 September 2015 Wholly from MARIL, and includes foreign dividend and capital return components1 Cash reconciliation A$m Pro forma available cash 30.72 Add: September 2015 receipt from FE ~
Slide 42: MQA distributions (cont’d)
MQA distributions (cont’d) MQA distributions supported by cash originating from APRR APRR APRR Profit APRR Profit Profit 2H 2014 1H 2015 Eiffarie +Tax Grouping 1H 2015 2H 2015 - Debt Service Eiffarie Cash Flow Eiffarie Cash Flow MQA 2H 2015 1H 2016 + Other Receipts - Corporate Expenses MQA Distribut
Slide 43: Cash flow: APRR to MQA shareholders
Cash flow: APRR to MQA shareholders 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 Cash available to Eif
Slide 44: Cash flow: APRR to MQA shareholders (cont’d)
Cash flow: APRR to MQA shareholders (cont’d) Cash flow: APRR to MQA shareholders Eiffarie/Financière Eiffarie (€m) 2H13 1H14 2H14 1H15 APRR dividend 213 241 209 180 add APRR tax instalments to FE 120 196 147 181 add Other1 5 (2) (1) 412 less Eiffarie net interest (123) (118) (120) (93) less FE tax p
Slide 45: MQA free cash flow
MQA free cash flow Cash flow: APRR to MQA shareholders FY 2014 APRR free cash flow (€m) 821 Eiffarie net interest (€m) (238) Eiffarie/FE opex (€m) (1) Tax grouping (€m) 245 Consolidated free cash flow (€m) 827 MQA’s proportionate share in € (20.14%) (€m) 167 MQA’s proportionate share in A$ (20.14%)1
Slide 46: Appendix
A APPENDIX MACQUARIE ATLAS ROADS
Slide 47: Register analysis
Register analysis1 Retail 8% Macquarie2 18% Other Foreign Institutions 15% Lazard Asset Mgt 9% Goldman Sachs Asset Mgt 7% Other Australian Institutions 43% 1. Register data as at 29 July 2015. Substantial shareholdings based on most recent notices (as of 31 August 2015). For substantial notices prio
Slide 48: MQA governance
MQA governance MQA has majority independent Boards and independent Chairmen Base fee calculated quarterly on market capitalisation MQA structure Macquarie Market capitalisation Base management fee1 Resources Up to A$1.0bn 1.75% plus (Staff, premises, IT, etc) More than A$1.0bn 1.00% 100% MQA Stapl
Slide 49: MQA performance
MQA performance MQA has outperformed its Benchmark by 433% since listing1 Three performance fees have been calculated to date MQA vs benchmark – 2010 performance fee: A$12.5m $4.00 21.0 MQA Market Volume (m) (RHS) – 2011 performance fee: A$50.1m MQA Share Price (LHS) – 2014 performance fee: A$58.2
Slide 50: Consolidated profit & loss account
Consolidated profit & loss account Statutory accounts – half year ended 30 June 2015 Half year to Half year to Revenue includes M6 Toll management fee, A$m 30 Jun 15 30 Jun 14 interest income and Warnow Tunnel services Revenue 1.7 1.0 fees Performance fees - (58.2) 100% of 2014 performance fee e
Slide 51: Consolidated balance sheet
Consolidated balance sheet Statutory accounts – as at 30 June 2015 As at As at Investments in associates includes APRR A$m 30 Jun 15 31 Dec 14 and Dulles Greenway accounted for using Current assets 44.8 31.0 the equity method Investments in associates 815.6 835.4 Current liabilities includes the
Slide 52: MQA cash flow summary
MQA cash flow summary Available cash (A$m) Half year to Half year to Distributions from Financière Eiffarie (FE) of 30 Jun 15 30 Jun 14 €28.6m in March 2015 (€25.6m in March 2014) Opening balance – 1 January 30.1 17.7 US$25.0m (A$32.3m) received following ITR Distribution from APRR 39.8 39.6 sal
Slide 53: Traffic and toll revenue performance
Traffic and toll revenue performance Change Quarter vs pcp Asset 1H 2015 1H 2014 vs pcp Sep 14 Dec 14 Mar 15 Jun 15 APRR Light Vehicle VKT (millions) 8,773 8,578 2.3% 0.6% 2.6% 1.8% 2.7% Heavy Vehicle VKT (millions) 1,672 1,639 2.0% 1.2% 0.4% 1.9% 2.0% Total VKT (millions) 10,445 10,217 2.2% 0.7% 2.
Slide 54: APRR profit
APRR profit EBITDA growth and interest savings for 2014 are offset by higher provision and income tax €550m 14 €500m 41 50 12 17 61 2 €450m 8 26 16 45 442 56 420 €400m 392 D&A, provisions, other1 D&A, provisions, other Operating taxes Operating taxes Net profit 2012 Net profit 2013 Net profit 2014 €
Slide 55: Eiffarie facility – key terms
Eiffarie facility – key terms Eiffarie has a €1.5bn five year term loan with two extensions of one year each Margin: 100bps above Euribor Eiffarie Loan Repayment Profile (€m) Year 30-Jun 31-Dec 2015 - 30 2016 30 40 2017 40 50 2018 50 60 2019 60 70 20201 70 80 20211 80 80 Maturity1 Balance remainin
Slide 56: Asset debt metrics
Asset debt metrics Net debt/ EBITDA/ As at 30 Jun 151 Gross debt Cash Net debt EBITDA Interest DSCR Lock-up Hedging APRR/Eiffarie2 €m 9,654.9 914.3 8,740.6 5.53x n/a n/a n/a 103.7% - APRR €m 8,154.9 632.2 7,522.7 4.87x 5.29x n/a n/a n/a - Eiffarie €m 1,500.0 282.1 1,217.9 n/a n/a n/a n/a n/a Dulles
Slide 57: Asset debt maturity profile and ratings
Asset debt maturity profile and ratings As at 30 Jun 151 2H15 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025+ APRR/Eiffarie €m 516.6 1,312.8 1,481.0 1,321.0 1,209.2 729.4 922.4 1,055.2 5.0 5.3 717.5 Dulles Greenway US$m - 57.6 54.4 41.8 40.1 21.0 24.7 42.3 40.1 37.9 636.4 Chicago Skyway US$m 10.8
Slide 58: Dulles Greenway performance
Dulles Greenway performance Strong traffic performance resulting from continued corridor development and higher utilisation rates 6 months to 30 June 2015: Traffic: +4.3%; Revenue: +7.3%; EBITDA: +7.3% Financial performance (US$m) Quarterly traffic performance (ADT) 56,000 80.5% 78.5% 79.8% 77.8%
Macquarie Atlas Roads — Investor Presentation (September 2015) on 6ix