Atlas Arteria · ASX:ALX
Atlas Arteria — Macquarie Atlas Roads — Citi 4th Australian Investment Conference 2012
29 slides from Atlas Arteria's conference presentation, October 2012
Slide 1: Macquarie Atlas Roads Citi Australian Investment Conference October 2012
MACQUARIE ATLAS ROADS CITI AUSTRALIAN INVESTMENT CONFERENCE OCTOBER 2012 1
Slide 2: 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 3: 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 4: Agenda
Agenda 1. Overview 5 2. APRR 10 3. Dulles Greenway 21 4. Outlook 27 Questions 29 4
Slide 5: 1. Overview
1. Overview
Slide 6: MQA portfolio
MQA portfolio Macquarie Atlas Roads (MQA) is a global toll road operator and developer Market Capitalisation1 $720,189,811 ASX Ranking Top 200 Number of toll road investments 6 Weighted average length of concession life remaining2 30 years Performance3 12 months to 31 Dec 11 6 months to 30 Jun 12 -
Slide 7: MQA portfolio
MQA portfolio MQA’s toll road investments are located in France, UK, USA and Germany1 1. MQA owns various percentage stakes in these assets. 7
Slide 8: Strategy & objectives
Strategy & objectives MQA to commence dividend payments1 Manage debt maturities over time De-risk assets Explore and maximise value by way of sale or securing dividend Deliver growth in the existing portfolio Holding Structure Individual asset risk quarantined from remaining portfolio and MQA 1. Bas
Slide 9: Dividend framework
Dividend framework Based on current outlook, MQA dividends are anticipated to commence in 2013 Dividends will be paid out of cash flow derived from APRR/Eiffarie distributions after addressing corporate requirements Investors A$ dividend MQA APRR/Eiffarie distribution less corporate requirements M
Slide 10: 2. APRR
2. APRR
Slide 11: APRR overview
APRR overview Europe’s 4th largest motorway network with ~2,300km of roads under concession Ownership: ~19.4%1 Remaining concession life: ~20 years Regulated toll increases — 2011-13: annual tariff increase of 85% CPI ex tobacco plus 0.5% under Contrats de Plan — Post 2013: annual tariff incre
Slide 12: APRR network growth
APRR network growth Mature network of 50 years and close to completion Additional 18km to be opened around 2016 2011 Network length: 2,264km 1961 SAPL established to build and 1994 operate A6 (Paris-Lyon) Addition of AREA Network length >1,500km 1963 First section opened 1987 Network length >1,000
Slide 13: Resilient financial performance
APRR Resilient financial 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
Slide 14: APRR traffic analysis
APRR traffic analysis 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 reported revenue growt
Slide 15: APRR traffic analysis (cont'd)
APRR traffic analysis (cont’d) YTD 2012 LV traffic down 0.9% vs pcp YTD 2012 HV traffic down 3.9% vs pcp Light vehicle traffic was adversely impacted by In addition to the factors that affected light a number of external factors including: vehicle traffic, heavy vehicle levels were also — High f
Slide 16: French economy
French economy Economic conditions in France continue to be weak France PMI France GDP Forecast 60 2.5% 55 2.0% 50 1.5% 45 1.0% 40 October 2012 April 2012 0.5% September 2011 35 April 2011 30 -% Sep 06 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 2012 2013 2014 2015 2016 2017 Source: Markit Source: IMF
Slide 17: APRR operations
APRR operations Opex down 4.2% vs 1H 2011; EBITDA margin above 70.0% 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 lower traffic1 Automation progressing — +17.8% active electronic t
Slide 18: French taxation
French taxation New tax measures have been announced during 2012 Implemented 3% tax on dividends paid outside a tax consolidated group1 Proposed as part of draft 2013 budget 2012-13: Interest deductibility limited to 85% of total net interest — From 1 Jan 2014 onwards: 75% of total net interest
Slide 19: 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 20: 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 Eiffarie distributions represent a portion of group free cash flow 19.4% residual cash flow HoldCo debt — Margin of 300bps Eiffarie — Cash sweep: 25% free cash flo
Slide 21: 3. Dulles Greenway
3. Dulles Greenway
Slide 22: Dulles Greenway overview
Dulles Greenway overview 22km toll road located in Loudoun County, one of the fastest growing counties in the United States Ownership: 50.0%1 Remaining concession life: ~44 years Regulated toll increases — 2013 to 2020: escalated by greater of: CPI +1% Real GDP 2.8% — By application to t
Slide 23: Dulles Greenway performance
Dulles Greenway performance EBITDA has grown strongly in spite of declining traffic Growth in EBITDA supported by fixed toll increases and internalisation of O&M Traffic impacted by toll increases, increased capacity on alternate routes and recent economic weakness EBITDA (US$m) vs traffic (ADT
Slide 24: 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 capacity upgrades since 2005, diverting significant traffic away Route
Slide 25: Dulles Greenway traffic corridor (cont'd)
Dulles Greenway traffic corridor (cont’d) Demographic factors expected to progressively increase congestion in corridor and on alternative routes Dynamic Corridor (Population Growth p.a.%) 2.50% 2.00% 1.50% 1.00% 0.50% -% Loudoun County Fairfax Co./Fairfax Arlington County Washington D.C. city/Falls
Slide 26: Dulles Greenway financing
Dulles Greenway financing Bond buyback program enhancing return on locked up cash To date a total of US$34.3m of locked up cash has been used to repurchase bonds Bonds purchased are due to mature in each year from 2018-2021 Average yield to maturity of 7.8% Further buyback opportunities curr
Slide 27: 4. Outlook
4. Outlook
Slide 28: 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 Dulles
Slide 29: Questions
Questions
Macquarie Atlas Roads — Citi 4th Australian Investment Conference 2012 on 6ix