Atlas Arteria · ASX:ALX
Atlas Arteria — H1 2019 Earnings Presentation
45 slides from Atlas Arteria's earnings presentation, Aug 29, 2019
Slide 1: 2019 Half Year Results Presentation
2019 Half Year Results Presentation A- atlasArteria 29 August 2019
Slide 2: Disclaimer
2 Disclaimer General Securities Warning Non-IFRS information Atlas Arteria (ALX) comprises Atlas This presentation is not an offer or invitation for subscription or This presentation includes certain financial measures that are not Arteria Limited (ACN 141 075 201) purchase of or a recommendation of
Slide 3: Country/Region specific disclaimers
3 Country/Region specific disclaimers Canada Hong Kong Malaysia United Kingdom This document does not constitute an This document has been prepared and Nothing in this presentation constitutes the In the United Kingdom this document is only offer to sell securities of ALX and is not intended to be d
Slide 4: Contents
4 Contents 01 Key highlights Graeme Bevans, CEO 02 Financial performance Nadine Lennie, CFO 03 Operations Graeme Bevans, CEO 04 Strategy and Outlook Graeme Bevans, CEO 05 Appendices
Slide 5: Key Highlights
5 01 Key Highlights Graeme Bevans Chief Executive Officer APRR France Photo of APRR, source: APRR
Slide 6: Atlas Arteria – 5 months post internalisation
6 01 Atlas Arteria – 5 months post internalisation ALX is in a strong position to grow for its shareholders, customers, communities, and staff Strong positive corporate culture – clear principles support teamwork and transparency Focus on Experienced internal team Safety and ESG Strategy for growth
Slide 7: Safety on our motorway networks is the number 1 priority
7 01 Safety on our motorway networks is the number 1 priority We have continued to add features to improve safety APRR Dulles Greenway Warnow － LTIFR 5.5 with incident number flat from － LTIFR 0 with 0 serious customer motor － LTIFR affected by 1 workplace injury – but 0 the prior half year accident
Slide 8: H1 2019 Highlights
8 01 H1 2019 Highlights Group operating revenue up 1.2% and proportionate EBITDA up 1.6%, while group traffic was down 1.1% Revenue Traffic Revenue EBITDA Business Highlights Contribution Growth Growth Growth － Continued strong growth in heavy vehicle traffic APRR － Light vehicle traffic returning t
Slide 9: ALX Distribution
9 01 ALX Distribution Continued strong growth in distributions H1 2019 distribution guidance of 15.0 cps reaffirmed ALX distributions (cps) － Wholly funded by and dependent upon projected distributions from APRR Paid in H1 Paid in H2 － A 25.0% increase on distribution paid in H2 2018 (interim divide
Slide 10: Financial Performance
10 02 Financial Performance Nadine Lennie Chief Financial Officer APRR France Photo of APRR, source: APRR
Slide 11: Income Statement
11 02 Income Statement ALX A$m H1 2019 H1 2018 % Chg ALX is profitable and corporate costs are expected to Revenue, other income perform in line with guidance － Toll Revenue 72.8 57.6 26.3% H1 2019 includes the consolidated financial performance of both Dulles － Other revenue 13.3 2.0 574.7% Greenwa
Slide 12: Proportionate EBITDA by business
12 02 Proportionate EBITDA by business APRR 100% (€m) H1 2019 H1 2018 % change Dulles Greenway 100% (US$m) H1 2019 H1 2018 % change Traffic (VKTm) 11,562 11,685 (1.0%) Traffic (ADT) 49,146 50,284 (2.3%) Operating revenue 1,250.8 1,234.7 1.3% Operating revenue 44.4 44.6 (0.4%) Operating expenses (295
Slide 13: APRR financial position
13 02 APRR financial position Earnings growth driven by operational performance and a low cost financing structure €m1 H1 2019 H1 2018 % change － APRR has investment grade credit ratings, rated A- Stable Outlook Total EBITDA 955.3 939.0 1.7% by both S&P (rating re-affirmed in November 2018) and Fitc
Slide 14: Dulles Greenway financial position
14 02 Dulles Greenway financial position One-Year Lock Up Test unlikely to be met at December year end US$m1 H1 2019 H1 2018 % change － US$1.0bn total gross outstanding debt as at 30 June 2019 with Traffic (ADT) 49,146 50,284 (2.3%) fixed repayment profile until 2056 Operating revenue 44.4 44.6 (0.4
Slide 15: ALX corporate cash flow in the 6 months to 30 June 2019
15 02 ALX corporate cash flow in the 6 months to 30 June 2019 APRR dividend to ALX (€m) ALX cash flows (A$m) ALX cash balance (A$m) H2 18 Remove APRR Eiffarie Dist. from MAF2 ALX ALX MIBL MQG Corp. HQ Transition Interest Net cash Existing April dist. Closing APRR net company debt Financière taxes/ d
Slide 16: Operations
16 03 Operations Graeme Bevans Chief Executive Officer Dulles Greenway Virginia, USA Photo of Dulles Greenway, source: David Madison photography
Slide 17: Value for Customers
17 03 Value for Customers Each day our network provides customers substantial saving on their travel time 120 MIN1 (PARIS-LYON) saving DULLES 10 MIN1 saving APRR AT A COST OF €35.40 AT A COST OF US$5.80 GREENWAY 18 MIN1 (ANNECY – GENEVA) WARNOW 16 MIN1 saving ADELAC saving AT A COST OF €8.40 AT A CO
Slide 18: APRR and ADELAC connecting Paris with Lyon and eastern France
18 03 APRR and ADELAC connecting Paris with Lyon and eastern France An efficient, safe and cost effective network for customers APRR Comparison between average tolls on APRR versus rest of France 1 AREA/ADELAC 30 25 20 Euro cents per VKT 15 10 5 - APRR/AREA ADELAC A'LIENOR COFIROUTE ATMB SANEF/SAPN
Slide 19: APRR traffic growth
19 03 APRR traffic growth Heavy vehicle and light vehicle growth create resilient traffic performance across business cycles APRR Light Vehicle Traffic APRR LV Traffic Growth vs French Household Income1 21,000 APRR LV VKT FR HH income APRR LV VKT Linear (APRR LV VKT) 1.25 LV traffic long term growth
Slide 20: APRR continues to improve customer satisfaction and margins
20 03 APRR continues to improve customer satisfaction and margins Ongoing commitment to improving operational efficiency Operational efficiency and innovation to improve margins － APRR increased their automated toll collections by 0.3% vs prior year － Electronic toll collection increased to now acco
Slide 21: APRR continues to invest for an improved customer experience
21 03 APRR continues to invest for an improved customer experience Investing in capital projects to grow APRR footprint Growth within the APRR footprint APRR － Since 2015, APRR had added 50km to the network AREA/ADELAC － APRR continued to grow and improve its network over the last 6 months with €232
Slide 22: Dulles Greenway
1. Source: refer to Sources (slide 44) the middle/upper income band developments along the corridor 03 Dulles Greenway － Population growth is an important driver of long term growth including promoting a mixed use of low, medium, and high-density － Loudoun County has a pro growth economic developmen
Slide 23: Dulles Greenway operational update
23 03 Dulles Greenway operational update Current Status Business improvement initiatives － Q2 2019 traffic is down 10% compared with Q2 2016 Leadership － Upgrades to surrounding roads means traffic is taking longer than － Pierce Homer (former Secretary of Transport in Virginia) was expected to refle
Slide 24: Dulles Greenway improving the customer experience
24 03 Dulles Greenway improving the customer experience Capital projects improving traffic flow and overall performance Dulles Toll Road (DTR) Connector Project － Alleviate morning peak congestion where Dulles Greenway merges on to the DTR － Phase 1 started Dec 2018 and expect completion late 2019 t
Slide 25: Warnow connecting the Baltic sea with Rostock and highways to Berlin
25 03 Warnow connecting the Baltic sea with Rostock and highways to Berlin Stable growth in an asset located in a favourable part of Europe Warnow historical traffic AADT Linear (AADT) 14,000 13,000 12,000 AADT 11,000 Rostock 10,000 9,000 8,000 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19
Slide 26: Strategy and Outlook
26 04 Strategy and Outlook Graeme Bevans Chief Executive Officer APRR France Photo of APRR, source: APRR
Slide 27: ALX value creation
27 04 ALX value creation Implementation against strategy underway － Streamline the current structures where possible － Lengthen the tenure of the － Disciplined capital management to build sustainable distributions average concession life － Active operational management － Diversify and manage risk Co
Slide 28: Investment discipline
28 04 Investment discipline Focus on strategy Leverage internal Optimal leverage Valuation discipline capability – Streamline the existing – Strong road operations and – Focus on investment grade – Disciplined approach to all portfolio maintenance experience leverage metrics investment – New opportu
Slide 29: Positive outlook with growing distributions
29 04 Positive outlook with growing distributions Atlas Arteria APRR Dulles Greenway － Benefits from internalisation to flow － Stronger growth in HV traffic expected to － Projects to ease congestions ongoing through into H2 2019 continue － Seasonal and unusual factors that － Negotiations with Macqua
Slide 30: Thank You Q&A
30 Thank You Q&A Contact for investors Nadine Lennie Chief Financial Officer Australia : 1800 621 694 International: +61 2 8232 7455 investors@atlasarteria.com
Slide 31: Appendices
31 05 Appendices Appendices Dulles Greenway Virginia, USA Photo of Dulles Greenway
Slide 32: ALX Corporate Structure
32 05 ALX Corporate Structure Stapled ATLAX (Australia) ATLIX (Bermuda) 13.43% 86.57% economic interest (via loans)2 Dulles Greenway 100% Macquarie Managed Third Party Investors Funds MIBL1 33.71% 16.28% 50.01% Eiffage MAF / MAF2 100% 50% + 1 share 50% - 1 share Warnow Tunnel Tax consolidated group
Slide 33: Management team post internalisation
33 Management team post internalisation Graeme Bevans Nadine Lennie Vincent Portal-Barrault Clayton McCormack Chief Executive Officer Chief Financial Officer Chief Operating Officer General Counsel and Company Secretary Commenced May 2018 Commenced with ALX in July 2018 Commenced with ALX in Decembe
Slide 34: Consolidated Balance Sheet
34 05 Consolidated Balance Sheet Statutory accounts As at As at 30 Jun 2019 31 Dec 2018 A$m ALX Corporate Dulles Greenway Warnow Tunnel ALX Total ALX Total Current assets 77.1 72.9 3.5 153.5 189.0 Investments in associates 1,572.3 – – 1,572.3 1,570.0 Tolling concessions – 2,253.5 210.6 2,464.1 2,578
Slide 35: ALX corporate cash flow summary
35 05 ALX corporate cash flow summary Cash (A$m) H1 2019 H1 2018 Opening balance – 1 January 92.9 41.6 Distributions from APRR 123.4 103.7 Interest on corporate cash balances 0.7 0.3 Management fees paid (19.1) (17.3) Corporate costs and other payments to suppliers (8.7) (3.0) ALX internalisation an
Slide 36: Cash flow: APRR to ALX securityholders
36 05 Cash flow: APRR to ALX securityholders Eiffarie / Financière Eiffarie (FE) H2 2018 H1 2018 H2 2017 H1 2017 APRR dividend 381 400 365 326 add APRR tax instalments to FE 204 246 222 217 add Eiffarie / FE opex and movement in reserves 0 - 7 (7) less Eiffarie interest reserve (5) (6) (84) (86) les
Slide 37: APRR Historical financial performance
37 05 APRR Historical financial performance Revenue and EBITDA growth underpinned by positive traffic performance and toll increases 5 year annual financial performance (€m) 70.7% 71.8% 72.4% 73.2% 73.8% 2,538 － Over the last 4 years to 31 December 2018, APRR’s EBITDA has 2,425 2,149 2,214 2,328 inc
Slide 38: APRR Tariff formula 2019-2023
38 05 APRR Tariff formula 2019-2023 Inflation-linked tolling and established regulatory regime underpin APRR’s predictable cashflows － Stable concession regime: In place for another 16-17 years － Predicable, inflation linked toll increases: Contracted toll increase of 70% of CPI to concession end －
Slide 39: APRR Earnings Stability
39 05 APRR Earnings Stability EBITDA has historically been resilient through economic cycles APRR EBITDA1 and France GDP2 growth €m €2,000m 6.0% €1,800m 1,874 1,775 4.0% €1,600m 1,685 1,589 1,520 €1,400m 1,475 1,399 1,428 2.0% 1,326 €1,200m 1,265 1,244 1,208 €1,000m 1,068 0.0% 974 924 941 €800m 888
Slide 40: French tax rates
40 05 French tax rates The Reform Agenda The Current Tax Situation – In 2017, France had voted a new law reducing the standard French – The standard corporate income tax rate for 2019 had been reduced to corporate tax rate, marking the first reduction since 1993. Under this 31% for financial years o
Slide 41: Dulles Greenway Historical financial performance
41 05 Dulles Greenway Historical financial performance Revenue and EBITDA growth underpinned by toll increases and a stable operating cost base 5 year annual financial performance (US$m) 80.6% 80.8% 81.6% 81.4% 81.3% － Over the last 5 years to 31 December 2018, Dulles Greenway’s 91.0 92.2 90.8 78.2
Slide 42: Dulles Greenway Earnings Stability
42 05 Dulles Greenway Earnings Stability Toll increases and cost control drive stable financial performance Financial performance (US$m) vs Traffic (ADT) 120 55,000 EBITDA Opex # Revenue Traffic (RHS) 100 50,000 91.0 92.2 90.8 84.4 78.2 16.8 17.2 17.0 80 74.1 45,000 71.6 16.2 64.7 66.4 15.2 63.7 13.
Slide 43: Dulles Greenway toll regime
43 05 Dulles Greenway toll regime Tolls on the Greenway are set on application by the Virginia State Corporation Commission (SCC) under the Virginia Highway Corporation Act (1988) (VHCA) － Section §56-542I of VHCA stipulates that: from 1 Jan 2013 through to 1 Jan 2020, toll rates would increase annu
Slide 44: Sources
44 05 Sources Slide 17 Value for Customers Warnow Based on Google maps: Lutten Klein to Dierkow-Neu: Warnow eastbound: Monday 8:30am departure (14-18min) APRR Alternative eastbound: Monday 8:30am departure (22-40min) Paris to Lyon Warnow westbound: Monday 5:30pm departure (14-20min) APRR southbound:
Slide 45: Glossary of terms
45 Glossary of terms AADT Average annual daily trips GDP Gross Domestic Product ACR Additional Coverage Ratio HV Heavy Vehicles ADELAC Autoroute des deux Lacs LBP Leesburg Bypass ADT Average daily trips LTIFR Lost time injury frequency rate ALX Atlas Arteria LV Light Vehicles APRR Autoroutes Paris-R