Atlas Arteria · ASX:ALX
Atlas Arteria — Macquarie Atlas Roads — Investor Presentation (March 2013)
72 slides from Atlas Arteria's investor presentation, Mar 1, 2013
Slide 1: Macquarie Atlas Roads March 2013 Investor Presentation ASX Release
Macquarie Atlas Roads Limited Macquarie Atlas Roads International Limited ACN 141 075 201 EC43828 No. 1 Martin Place Telephone 612 8232 3333 26 Burnaby Street SYDNEY NSW 2000 Facsimile 612 8232 4713 Hamilton HM 11 GPO Box 4294 Internet: www.macquarie.com/mqa BERMUDA SYDNEY NSW 1164 DX 10287 SSE AUST
Slide 2: Macquarie Atlas Roads Investor Presentation March 2013
MACQUARIE ATLAS ROADS INVESTOR PRESENTATION MARCH 2013
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: Contents
Contents 1. Overview 5 2. APRR 15 3. Other Assets 32 4. Dividends 44 Appendix 50 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: $820,681,4131 – 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: 2012 snapshot
2012 snapshot Positive EBITDA growth continues in spite of difficult economic conditions 2012 Statutory results summary Portfolio Summary Revenue and other income: A$93.5m (2011: A$91.9m) Loss after income tax : A$124.4m (2011: A$289.5m loss) 2012 Portfolio highlights APRR EBITDA continues to
Slide 10: MQA structure
MQA structure MQA's structure is integral to its strategy MQA has no corporate level debt and A$12.9m 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. MQA
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 continue to deliver annual cash flows over its concession life — Dulles Greenway is expected to deliver cash flows in the medium to longer term Rem
Slide 13: MQA value considerations
MQA value considerations MQA is a vehicle for investment in 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 — Excl
Slide 14: Governance
Governance MQA has majority independent Boards and independent Chairmen Base fee calculated quarterly on market capitalisation Market capitalisation Base management fee MQA structure Up to A$1.0bn 2.00% plus Macquarie Between A$1.0bn and A$3.0bn 1.25% plus Resources More than A$3.0bn 1.00% (Staff,
Slide 15: MQA performance
MQA performance MQA has outperformed its Benchmark by 142% since listing1 Two performance fees have been calculated to date MQA vs Benchmark — 2010 performance fee: A$12.5m A$2.25 20.0 — 2011 performance fee: A$50.1m MQA Market volume (m) MQA These fees are payable in three equal annual A$2.00 1
Slide 16: 2. APRR
2. APRR
Slide 17: APRR/Eiffarie
APRR/Eiffarie 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/Eiffarie APRR performance Robust performance demonstrated through economic downturn and oil spikes APRR EBITDA1 (€m), average French diesel price and French GDP2 1,399 1,428 1.50 1,326 5.0% 1,244 1,265 1,208 1,068 974 2.5% diesel price (€/L) Average French 1.25 French GDP (%) 0.0% 1.00 -2.5% 0.
Slide 19: APRR performance (cont'd)
APRR/Eiffarie APRR performance (cont’d) 2012 traffic impacted by external factors including weak economic conditions and high fuel prices Year to 31 December 20121 — Traffic: -1.7%; Revenue: +0.8% (€2,038.6m); EBITDA: +2.1% (€1,427.5m) EBITDA Performance (€m)1 Quarterly Traffic Performance (VKTm)
Slide 20: APRR traffic analysis
APRR/Eiffarie APRR traffic analysis 2012 LV traffic down 1.3% vs pcp Revenue and traffic analysis 2012 HV traffic down 3.8% vs pcp 3% Light vehicle traffic adversely impacted by: 15% — Weak economic conditions — High fuel prices Revenue Traffic mix Heavy vehicle levels were also impacted by the
Slide 21: APRR traffic
APRR/Eiffarie APRR traffic Continued LV recovery, HV closely correlated to French industrial production Total traffic lower despite extra day reflecting weak economic environment, principally felt by HV Weak economic conditions are expected to continue during 2013 APRR traffic vs French manufact
Slide 22: French economy
APRR/Eiffarie French economy French economic outlook continues to be uncertain France GDP forecasts1 2.5% 2.0% 1.5% 1.0% Oct-12 Apr-12 0.5% Sep-11 Apr-11 Oct-10 Apr-10 -% 2012 2013 2014 2015 2016 2017 1. International Monetary Fund (IMF). 21
Slide 23: APRR operations
APRR/Eiffarie APRR operations EBITDA margin at 70.0% Operating expenses (ex operating taxes) broadly flat since 2006 €800m 80.0% 67.8% 68.0% 68.4% 69.2% 70.0% 67.0% 64.0% €600m 60.0% 232 229 231 236 240 264 1 258 €400m 40.0% 153 162 149 139 156 140 133 €200m 20.0% 209 209 210 220 218 219 220 €0m -
Slide 24: APRR profit
APRR/Eiffarie APRR profit APRR’s profit impacted by increased net interest expense in 2011 and 2012 €550m 17 (25) 82 €500m (40) (57) €450m 6 7 (36) 17 6 419 (1) (4) €400m 395 D&A, provisions, other D&A, provisions, other 392 Operating taxes Operating taxes Net profit 2010 Net profit 2012 Net profit
Slide 25: Free cash flow
APRR/Eiffarie Free cash flow APRR generates substantial cash flow in excess of profit Undistributed cash is reinvested in the business through capital expenditure and debt repayment Group expected to naturally deleverage over time Tax grouping provides additional benefit from deductions at Eif
Slide 26: APRR capital expenditure
APRR/Eiffarie APRR capital expenditure Since 2006, ~€2.75bn has been spent to grow, improve and maintain the network 2006 110 215 45 2007 122 343 24 2008 115 303 81 2009 102 171 159 2010 115 104 187 2011 108 123 54 2012 94 168 27 €0m €100m €200m €300m €400m €500m €600m Maintenance 1 Additional inves
Slide 27: Ownership structure
APRR/Eiffarie Ownership structure Ownership Ownership structure June 2010 - Eiffarie acquired an additional 13.7% Other Macquarie interest in APRR, increasing its stake to 95.2% MQA MEIF Managed Funds December 2012 - compulsory acquisition of remaining 38.87% 25.75% 35.38% minorities completed a
Slide 28: 2012 Refinancing plan completed
APRR/Eiffarie 2012 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
Slide 29: APRR liquidity
APRR/Eiffarie APRR liquidity Strong liquidity position with manageable maturity profile APRR generated €871m of operating cash flow (pre-capex) Over €1.4bn available cash/liquidity as at 31 December 2012 Consolidated debt ratios (including Eiffarie) remain solid as at 31 December 2012 — Consol
Slide 30: Financing
APRR/Eiffarie Financing APRR well supported in bond markets, with recent 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 Sep 12 Dec 12 €700m - 7.5% 2015 €1,000m - 5.0% 2017 €500m - 4.875% 2019 €500m - 4
Slide 31: APRR cash flow to MQA
APRR/Eiffarie APRR cash flow to MQA Current structure is a legacy of original acquisition in 2006 and CNA debt terms Simplified holding structure MQA Initial distributions expected via Eiffarie distributions represent a shareholder loan repayments. portion of group free cash flow 3% dividend tax wil
Slide 32: Other developments
APRR/Eiffarie Other developments Ratings Fitch initiated coverage of APRR with BBB+ (stable) Completion of APRR acquisition APRR compulsory acquisition completed Delisted from Euronext Paris on 18 December 2012 Looking forward Toll increase of 1.94% on 1 February 2013 — Final increase under
Slide 33: 3. Other Assets
3. Other Assets
Slide 34: 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 35: Dulles Greenway Performance
Dulles Greenway Performance 2012 traffic flat but for the effects of Hurricane Sandy Year to 31 December 2012 — Traffic: -0.2%; Revenue: +8.1% (US$72.4m); EBITDA: +11.8% (US$58.2m) Higher revenue and EBITDA for the year ended 31 December 2012 reflect the impact of the Greenway toll increases imp
Slide 36: 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 signif
Slide 37: 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: Du
Slide 38: Corridor
Dulles Greenway Corridor Demographic factors expected to progressively increase congestion in corridor and on alternative routes Small traffic growth posted during two consecutive quarters — Performance helped by milder winter weather Dynamic Corridor (Population Growth p.a.%) 3.00% 2.50% 2.00% 1.
Slide 39: Other developments
Dulles Greenway Other developments Toll increase of 3.02% approved by SCC on 22 January 2013 (Actual tolls rounded downwards to the nearest US$0.05) New SCC hearing into Dulles Greenway tolls has been set for April 2013. The Dulles Greenway will be required to defend its toll rates Base traffi
Slide 40: Financing
Dulles Greenway Financing Debt 100% fixed rate bonds, amortisation schedule locked in until 2056 No refinancing requirements Dulles Greenway Debt Maturity Profile (US$m) 250 700 Maturity profile for external debt as at 31 December 2012 (excl. future capitalised interest) Total future current/capital
Slide 41: 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 42: 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 43: 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 44: 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 45: 4. Dividends
4. Dividends
Slide 46: Dividend framework
Dividend framework MQA is expected to declare its first dividend in March 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 reserve Cash fl
Slide 47: MQA dividend
MQA dividend MQA 1H 2013 dividend guidance of 2.4 cents per security 100% foreign unfranked dividend from MARIL Anticipated 2013 receipts from Financière Eiffarie March 2013 ~€14.5m Total: ~€32.5m - €34.5m September 2013 ~€18m - €20m ~€0.068 - €0.072 per MQA security1 March 2013 FE distribution
Slide 48: MQA dividend (cont'd)
MQA dividend (cont’d) MQA 1H 2013 dividend APRR pays a dividend out of 1H 2012 profit to Eiffarie during December 2012 Eiffarie calculates distribution based on residual cash after tax grouping and debt repayments as at 31 December 2012 MQA to receive Eiffarie distribution ~2.5 months later (M
Slide 49: Cash flow: APRR to MQA shareholders
Cash flow: APRR to MQA shareholders Cash flow: APRR to MQA shareholders (€m) Eiffarie/FE 2H 2012 APRR dividend A 121 add APRR tax instalments to FE B 117 less Other1 C 2 less Eiffarie net interest D (103) less FE tax payments/provisions E (35) Distributable cash F=A+B–C–D–E 103 less Debt repayment G
Slide 50: MQA free cash flow
MQA free cash flow Cash flow: APRR to MQA shareholders FY 2012 APRR free cash flow (€m) 871 Eiffarie net interest (€m) (184) Eiffarie opex1 (€m) (1) Tax grouping (€m) 174 Consolidated free cash flow (€m) 859 MQA’s proportionate share (19.44%) (€m) 167 MQA’s proportionate share in A$ (19.44%)2 (A$m)
Slide 51: Appendix
Appendix
Slide 52: Register Analysis
Register Analysis1 Retail 7.62% Macquarie 21.75%2 Other Foreign Institutions 22.04% Lazard 13.51% Other Australian IOOF Institutions 6.19% 28.89% 1. Register data as at 31 January 2013. Substantial notices as of 25 February 2013. For substantial notices prior to 3 July 2012, the % of issued securiti
Slide 53: MQA statutory accounts
MQA statutory accounts Statutory accounting MQA consolidates the results and balances of its controlled asset (M6 Toll) MQA equity accounts its non-controlled assets: — APRR, Dulles Greenway, Chicago Skyway, Indiana Toll Road, Warnow Tunnel Equity accounting Initially recognise assets at acqui
Slide 54: Consolidated profit & loss account
Consolidated profit & loss account Statutory accounts – Year ended 31 December 2012 Non- MQA Total MQA Total MQA controlled Year ended Year ended A$m Corporate M6 Toll assets 31 Dec 12 31 Dec 11 Total revenue and other income 0.4 93.1 - 93.5 91.9 Financing costs - (104.6) - (104.6) (102.6) Managemen
Slide 55: Consolidated balance sheet
Consolidated balance sheet Statutory accounts – as at 31 December 2012 Non- MQA Total MQA Total MQA controlled As at As at A$m Corporate M6 Toll assets 31 Dec 12 31 Dec 11 Current assets 19.1 43.3 - 62.4 64.0 Investments in associates - - 702.8 702.8 753.4 Property, plant and equipment - 746.7 - 746
Slide 56: Proportionately consolidated performance
Proportionately consolidated performance Actual Pro Forma Actual Year ended Year ended Change vs Year ended A$m 31 Dec 12 31 Dec 111 2 pcp 31 Dec 112 Operating revenue 683.6 671.0 1.9% 712.2 Operating expenses (179.7) (181.4) (1.0%) (193.8) EBITDA from road assets 503.9 489.6 2.9% 518.4 EBITDA margi
Slide 57: MQA cash flow summary
MQA cash flow summary Available cash A$m Opening balance – 1 January 2012 17.3 Distribution from Financière Eiffarie (FE) of Distributions from assets 10.0 €8.0m in September 2012 reflecting part payment from APRR 1H 2012 profit Interest on corporate cash balances 0.4 Transtoll liquidation proceed
Slide 58: Statutory accounts vs Management Information Report (MIR)
Statutory accounts vs Management Information Report (MIR) Statutory result for the period Proportionally consolidated financial performance M6 Toll results consolidated. Non-controlled toll road asset results Aggregation of operating results of proportionate interests in all toll road included in sh
Slide 59: Reconciliation
Reconciliation Statutory results to proportionate earnings A$m Year ended 31 Dec 12 Year ended 31 Dec 11 Loss attributable to MQA security holders (124.4) (289.5) M6 Toll related adjustments: Non-cash financing costs 30.5 47.9 Depreciation and amortisation net of maintenance capex 21.7 26.4 Operatin
Slide 60: Reconciliation
Reconciliation Cash flow and cash balance A$m Year ended 31 Dec 12 Year ended 31 Dec 11 Net statutory operating cash flows 45.3 44.9 M6 Toll related adjustments: Toll revenue received (106.3) (105.4) Interest and other income received (3.9) (4.1) Net indirect taxes paid 16.9 18.5 Payments to supplie
Slide 61: Traffic and toll revenue performance
Traffic and toll revenue performance Quarter vs pcp Change Asset 2012 2011 vs pcp Mar 12 Jun 12 Sep 12 Dec 12 APRR Light Vehicle VKT (m) 17,971 18,203 (1.3%) (0.2%) (2.0%) (0.6%) (2.5%) Heavy Vehicle VKT (m) 3,172 3,297 (3.8%) (2.4%) (5.2%) (4.1%) (3.6%) Total VKT (m) 21,143 21,500 (1.7%) (0.5%) (2.
Slide 62: Traffic and toll revenue performance
Traffic and toll revenue performance Quarter vs pcp Change Asset 2012 2011 vs pcp Mar 12 Jun 12 Sep 12 Dec 12 Chicago Skyway Av All Day Traffic 42,228 42,066 0.4% (0.7%) 1.1% 0.4% 0.7% Av Daily Toll Rev (US$) 190,095 183,713 3.5% 1.5% 4.9% 3.3% 4.1% Indiana Toll Road All Days - Ticket FLET 23,739 23
Slide 63: Proportionate earnings – by asset
Proportionate earnings – by asset Actual Proportionate Earnings split for the year ended 31 December 2012 Dulles Chicago Indiana Warnow Total A$m APRR1 Greenway M6 Toll Skyway Toll Road Tunnel Operating revenue 486.2 35.0 92.8 15.2 47.1 7.3 683.6 Operating expenses (146.2) (6.8) (13.5) (1.8) (8.8) (
Slide 64: Debt maturity profile of assets
Debt maturity profile of assets As at 31 Dec 121 2013 2014 2015 2016 2017 2018 2019 2020 2021+ APRR/Eiffarie €m 348.0 1,115.3 1,348.0 953.5 4,109.8 1,211.0 579.2 4.4 219.1 Dulles Greenway US$m 50.8 51.2 51.5 49.1 46.3 35.6 34.1 18.0 673.1 M6 Toll £m - - 1,010.8 - - - - - - Chicago Skyway US$m 18.1 1
Slide 65: Asset debt metrics
Asset debt metrics Net Debt/ EBITDA/ As at 31 Dec 121 Gross Debt Cash Net Debt EBITDA Interest DSCR Lock-Up Hedging APRR/Eiffarie2 €m 10,312.2 877.5 9,434.7 6.61x 3.70x 2.55x 1.60x 124.8% − APRR €m 7,593.4 702.3 6,891.1 − Eiffarie €m 2,718.8 175.2 2,543.6 Dulles Greenway3 US$m 1,009.7 152.8 856.9 14
Slide 66: Asset debt ratings
Asset debt ratings Rating Rating Agency Rating since1 APRR2 BBB- Standard and Poor’s June 2009 BBB+ Fitch October 2012 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 A2 Moody’s January 2013 The
Slide 67: Foreign exchange rates
Foreign exchange rates As at Spot foreign exchange rates 31 Dec 12 Euro 0.7877 Pound Sterling 0.6400 United States Dollar 1.0395 The spot exchange rates in this table are the exchange rates that have been applied to the translation of proportionate net debt as at 31 December 2012. Quarter ended Quar
Slide 68: Eiffarie term loan facility – key terms
APRR/Eiffarie Eiffarie term 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 minimum cash sweep − Details can be found on
Slide 69: Eiffarie minimum cash sweep
APRR/Eiffarie Eiffarie minimum cash sweep 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 68
Slide 70: APRR revolving credit facility – key terms
APRR/Eiffarie 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 Financ
Slide 71: Macro factors: Fuel deliveries
Macro factors Fuel deliveries Fuel consumption trends between France, US and UK have diverged since 2008 Motor vehicle fuel deliveries1 105 100 95 90 85 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 France US UK Sources France: Union Française des Industries Pétrolières US: U
Slide 72: Macro factors: Real wages
Macro factors Real wages UK consumer purchasing power has steadily declined since 2008 Real wages1 105 100 95 90 85 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 France US (Private) UK (CPI Adj.) UK (RPI Adj.) Sources France: INSEE US: US Bureau of Labour Statistics UK: UK Of
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