Atlas Arteria · ASX:ALX

Atlas Arteria — Macquarie Atlas Roads — Macquarie Australia Conference 2011

39 slides from Atlas Arteria's conference presentation, May 6, 2011

  1. Slide 1: Macquarie Atlas Roads - Macquarie Australia Conference

    MACQUARIE ATLAS ROADS MACQUARIE AUSTRALIA CONFERENCE 6 MAY 2011

  2. 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

  3. 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

  4. Slide 4: Agenda

    Agenda 1. Overview 2. Recent Performance 3. Strategy 4. Wrap-up 5. Questions 6. Appendix Note: Dollar amounts throughout the presentation are Australian Dollars unless stated otherwise 4

  5. Slide 5: 1. Overview

    1. Overview

  6. Slide 6: MQA snapshot

    MQA snapshot MQA was created out of the restructure of Macquarie Infrastructure Group into two separate ASX-listed toll road groups, MQA and Intoll 2011 Listing Date 25 January 2010 Market Capitalisation1 A$834,578,198 Shares on Issue 452,345,907 ASX Ranking Top 200 Toll Roads in Portfolio 6 Country

  7. Slide 7: MQA performance

    MQA performance MQA has outperformed the benchmark by 196%1 since listing on 25 January 2010 MQA Security price vs. Benchmark performance 2.50 20,000 MQA Market volume 18,000 MQA Close price 2.00 16,000 S&P/ASX 300 Industrials Accumulation Index2 Market volume ('000s) 14,000 Close price (A$) 1.50 12

  8. Slide 8: MQA portfolio

    MQA portfolio MQA’s toll road investments are located in France, UK, USA and Germany Weighted Average Length of Concessions Remaining 32 Years1 1. Weighted by proportionate EBITDA. APRR’s remaining concession life is 22 years, with the weighted average concession life of the remainder of the portfol

  9. Slide 9: MQA structure

    MQA structure … protects asset values and is integral to its strategy „ MQA has no corporate level debt and $28.4m 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-defaul

  10. Slide 10: 2. Recent Performance

    2. Recent Performance

  11. Slide 11: Traffic and revenue performance

    Traffic and revenue performance Toll Revenue increased on all portfolio roads during the March 2011 quarter MQA Pro Forma Performance vs pcp MQA Traffic and Revenue Performance vs pcp FY to 31 December 20101 March 2011 Quarter 7.0% 5.4% 5.4 5.4% 4.5% 4.5% 2.8% 2.1% 2.1% 2.1% Traffic Total EBITDA Tra

  12. Slide 12: Core asset traffic and revenue performance March quarter 2011

    Core asset traffic and revenue performance March quarter 2011 APRR Dulles Greenway M6 Toll Revenue 12.0% Revenue Traffic Traffic 6.7% (1.3%) 4.1% Traffic Revenue 0.7% 1.9% VKT Revenue ADT ADR ADT ADR 4,840m €456m 44,624 US$175k 34,909 £151k „ Heavy snow in pcp „ Toll increase 1 July 2010 „ Toll incr

  13. Slide 13: Historical business confidence

    Historical business confidence Business confidence still retaining positive trend 120 110 100 90 80 70 60 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 US Manufacturing PMI (ISM) France Business Climate (Insee) UK Business Confidence (ICAEW, scaled) Germa

  14. Slide 14: Historical consumer confidence

    Historical consumer confidence Consumer confidence weakening except for Germany 120 110 100 90 80 70 60 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 US Consumer Confidence (Conference Board, scaled) France Consumer Confidence (Insee) UK Consumer Confiden

  15. Slide 15: Cost control – APRR

    Cost control – APRR EBITDA margin gradually improving over the last 5 years Revenue vs Expenses (€m) 1,940 1,834 1,860 1,803 1,670 1,571 597 602 595 590 595 614 2005 2006 2007 2008 2009 2010 EBITDA 62.0% 64.0% 67.0% 67.8% 68.0% 68.4% Margin Revenue Expenses Additional snow expenses of €17m 15

  16. Slide 16: Cost control – APRR (cont.)

    Cost control – APRR (cont.) „ Increased automation of payment — electronic toll collection was 44.6% of total transactions in 2010 vs 42.5% in 2009 — automated transactions were 77.5% of total transactions in 2010 vs 73.1% in 2009 — 128 of 150 toll plazas are now operated completely or partially rem

  17. Slide 17: Cost control – M6 Toll

    Cost control – M6 Toll M6 Toll operating at close to 90% margin Toll Payments by Method (%) „ Increased automation results in improved Tags 3% operational efficiency Cards Other 10% 1% „ Cards and electronic tags are M6 Toll’s Manual 2004 43% preferred method of payment Coins — Fewer staff, reduced

  18. Slide 18: Cost control – Dulles Greenway

    Cost control – Dulles Greenway „ Self-performing operations & Half Year Opex Comparison maintenance since May 2010 yielding 2009 vs 2010 savings during H2 2010 while maintaining 15.0 customer service 12.0 „ % of non-cash transactions has increased from 73.5% in 2004 to 88.7% in 2010 9.4 9.4 8.7 9.0

  19. Slide 19: 3. Strategy

    3. Strategy

  20. Slide 20: MQA strategy

    MQA strategy Yield stock Sustainable dividend stream Refinance assets at suitable opportunity T Enhance the three core MEN assets GE N A A Deliver growth in ALM existing portfolio P IT CA E D Value recovery stock LIN CI P DIS Assets requiring substantial operational and financial management to maxim

  21. Slide 21: MQA value opportunity

    MQA value opportunity UPSIDE POTENTIAL Dulles Chicago Indiana Toll Warnow APRR M6 Toll Greenway Skyway Road Tunnel Short-term Medium-term Long-term „ APRR is the cornerstone of value for MQA „ Remaining portfolio represents upside potential with no corresponding downside to the value of APRR 21

  22. Slide 22: Unlocking near term value

    Unlocking near term value APRR is MQA’s largest and most important asset „ APRR provides the potential to deliver consistent long term dividends to MQA. „ The key to unlocking value is the successful refinancing of Eiffarie (APRR Holdco) debt — Consortium debt at Eiffarie matures in February 2013 wi

  23. Slide 23: Refinancing plan

    Refinancing plan Status Comments 3 Minority acquisition materially reduces refinancing risk 3 Financial advisor appointed January 2011 issuance of €1.05bn bonds commences building of liquidity at APRR: - Lengthens maturity profile at APRR 3 - Facilitates distribution of profit to Eiffarie - Provides

  24. Slide 24: Outlook on refinancing

    Outlook on refinancing Continued growth throughout economic downturn and 2008 oil spike „ APRR’s resilient performance recognised „ Eiffarie debt expected to reduce from by credit markets €3.6bn to ~€2.7bn by Q1 2012 „ Increased shareholding and fiscal „ Expected Group Net Debt/EBITDA of ~6.0x conso

  25. Slide 25: Cost of travelling in France

    Cost of travelling in France „ Although price per litre of fuel is rising in France, the cost of car travel relative to incomes has fallen over time Hours of work at average per capita income to buy EUR/litre of fuel fuel for travelling 100km1 1.40 2.20 1.30 2.00 1.20 1.10 1.80 1.00 1.60 0.90 0.80 1

  26. Slide 26: Credit market trends

    Credit market trends Western Europe Loan Volume 500 400 - 75% US$ billion 300 + 68% 200 100 - 2Q03 4Q03 2Q04 4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 Source: LoanConnector Investment grade loans Leveraged loans Global Corporate Bonds 600 500 + 120% US$ billion 400 300 200 100

  27. Slide 27: Unlocking long term value

    Unlocking long term value Excluding APRR, MQA has a weighted average concession life of 53 years1 CityLink Westlink M7 ConnectEast Warnow Tunnel M6 Toll Dulles Greenway Indiana Toll Road Chicago Skyway 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 2110 1. Weighted by proportionate EBITDA. APRR’s

  28. Slide 28: Natural de-levering over time

    Natural de-levering over time 40.0x Net debt / EBITDA (x) Illustrative reduction in leverage multiple through growth in EBITDA1 Using actual Concession term 35.0x net debt as at remaining as at 31 Dec 2010 31 Dec 2030 30.0x 2010 20301 M6 Toll2 23.1x 5.8x 23 25.0x 20.0x Dulles 17.6x 4.4x 25 Greenway

  29. Slide 29: Refinancing landscape

    Refinancing landscape Favourable maturity profile provides >4 year window to plan and execute refinancings 6,000 63.7% 5,000 Debt maturing (A$m) 4,000 3,000 2,000 19.4% 1,000 7.6% 3.3% 2.4% 0.6% 0.7% 0.8% 0.8% 0.8% 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020+ M6 Toll Greenway Skyway ITR Rost

  30. Slide 30: 4. Wrap-Up

    4. Wrap-Up

  31. Slide 31: MQA valuation considerations

    MQA valuation considerations APRR is MQA’s largest asset APRR + Dulles Greenway + M6 Toll + Non-Core Assets = MQA Not including the value in assets other than APRR/Eiffarie, MQA’s market capitalisation1 would imply an APRR/Eiffarie valuation at ~10.3x EV/EBITDA as at December 2010. Metrics will cont

  32. Slide 32: 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 APRR Minority Acquisition Disciplined Capital Management 5.4% growth in EBITDA APRR Debt issuance and liqu

  33. Slide 33: Management's outlook for 2011

    Management’s outlook for 2011 „ Revenue to continue to benefit from toll increases in 2010 and early 2011 „ Continued recovery of heavy vehicle traffic – APRR and ITR ticket system „ Current high oil prices expected to cause weakening in light vehicle traffic volumes across the portfolio „ UK traffi

  34. Slide 34: 5. Questions

    5. Questions

  35. Slide 35: 6. Appendix

    6. Appendix

  36. Slide 36: APRR/Eiffarie

    APRR/Eiffarie Strategic Location and Scale „ 2,264 km (18km to be constructed and opened by 2016) „ Covers major trade and tourism routes through Western Europe „ Link between France’s two largest cities - A6 links Paris and Lyon „ Interconnection between France, Switzerland, Italy & gateway to Cent

  37. Slide 37: Dulles Greenway

    Dulles Greenway Location „ 22km „ Located in Loudoun County – one of the fastest growing counties in the United States with over 100,000 residents „ Can be expanded to meet traffic demand Tolling „ Fixed toll increases until Dec 2012 „ From 2013 to 2020, escalate by greater of CPI +1%, Real GDP, or

  38. Slide 38: M6 Toll

    M6 Toll Location „ 42km „ Bypasses the City of Birmingham and the M6 Motorway, one of the most congested motorways in the UK „ Significant industrial, housing and economic development occurring along route as a result of road opening Tolling „ Market based tolling Concession Expiry „ 31 January 2054

  39. Slide 39: Non-core assets

    Non-core assets Non-core assets represent <10% of MQA’s portfolio Concession Description Tolling Financing Expiry Set until 2017, thereafter tolls will Chicago 12.5km road Long-term 2104 increase by the greater of 2%, CPI Skyway located in Chicago wrapped debt or nominal GDP per capita 253km toll ro

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