Atlas Arteria · ASX:ALX
Atlas Arteria — FY2018 Earnings Presentation
44 slides from Atlas Arteria's earnings presentation, Feb 28, 2019
Slide 1: 2018 Full Year Results Presentation
Atlas Arteria 2018 Full Year Results Presentation 28 February 2019
Slide 2: Important notice and disclaimer
Important notice and disclaimer Disclaimer Atlas Arteria (ALX) comprises Atlas Arteria Limited (ACN 141 075 201) (ATLAX) and Atlas Arteria International Limited (Registration No. 43828) (ATLIX). Macquarie Fund Advisers Pty Limited (ACN 127 735 960) (AFSL 318 123) (MFA) is the manager/adviser of ATLA
Slide 3: 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 4: Contents
Contents 01 Overview Insert divider title 3 01 James divider A Insert Hooke, title 7 Chief Executive Officer Financial Performance 02 Bodie ter Kuile, Chief Financial Officer Operational Update 03 James Hooke, Chief Executive Officer Internalisation Update 04 Graeme Bevans, Chief Executive Officer E
Slide 5: Overview
01 Overview James Hooke, Chief Executive Officer
Slide 6: 2018 highlights
2018 highlights Continued traffic and revenue growth in 2018 FY18 highlights • Statutory net profit of A$59.9 million2, driven by the consolidation of Dulles Greenway’s results for the full year and ALX’s share of net profits from its investment in APRR, partially offset by performance fees3 paid in
Slide 7: Portfolio update: traffic performance
Traffic performance ALX’s portfolio continued to benefit from business diversification across different geographies • Weighted average portfolio traffic grew 1.5% compared to 2017, underpinned by traffic growth at ALX’s European roads, offset by weaker traffic performance at the Dulles Greenway Traf
Slide 8: Portfolio update
Portfolio update Continued focus on enhancing value through asset and capital management • Portfolio currently geared with • Acquisition of additional 30% interest 6.3x Net Debt / EBITDA (FY17: 6.5x) Portfolio in the Warnow Tunnel: 100% Portfolio • Average cost of debt for the portfolio ownership cr
Slide 9: Financial Performance
02 Financial Performance Bodie ter Kuile, Chief Financial Officer
Slide 10: Consolidated income statement
Consolidated income statement Statutory accounts 12 months ended 12 months ended 31 December 2018 31 December 2017 ALX Dulles Warnow ALX ALX A$m Corporate Greenway1 Tunnel2 Total Total Total revenue and other income 14.53 125.7 5.8 146.0 473.03 Share of net profits of associates 246.14 - - 246.1 188
Slide 11: Consolidated balance sheet
Consolidated balance sheet Statutory accounts As at As at 31 December 2018 31 December 2017 ALX Dulles Warnow ALX ALX A$m Corporate Greenway1 Tunnel1 Total Total Current assets 90.8 94.4 3.7 189.0 124.2 Investments in associates 1,570.0 - - 1,570.0 1,483.3 Tolling concessions - 2,364.1 214.3 2,578.4
Slide 12: ALX corporate cash flow summary
ALX corporate cash flow summary Available cash (A$m) 2018 2017 Opening balance – 1 January 39.8 223.4 1. Distributions from Financière Eiffarie (FE) of €64.3m in March 2018 (March 2017: €54.8m) and €89.7m in September 2018 Distributions from APRR1 249.4 147.8 (September 2017: €47.1m). Fees from M6 T
Slide 13: ALX distributions
ALX distributions 2019 distribution guidance of 30.0 cps reaffirmed ALX distributions (cps) • Wholly funded by and dependent upon projected distributions from APRR 15.0 1H 2H Guidance • Represents 25.0% increase on 2018 distribution paid • Distribution guidance is subject to business performance, fo
Slide 14: Operational Update
03 Operational Update James Hooke, Chief Executive Officer
Slide 15: APRR 2018 results
APRR 2018 results1 Light vehicles Heavy vehicles Traffic VKTbn VKTbn 2.2% 24.3bn VKT2 21.0 3.9 +4.7% +1.7% 3.9 3.8 20.5 +2.8% 20.5 +5.9% 3.7 20.0 20.1 3.7 +3.6% 3.6 19.5 Revenue 19.6 3.5 +4.5% 4.7% €2,537.6m 19.0 +2.6% 3.4 3.5 18.9 +1.6% +2.9% 18.5 3.3 3.3 18.4 +1.5% 18.0 3.2 3.2 EBITDA 17.5 3.1 5.6
Slide 16: APRR French macroeconomic environment
APRR French macroeconomic environment APRR performance is influenced by French economic activity Household disposable income and APRR light vehicle traffic1 Import, manufacturing and APRR heavy vehicle traffic1 120 130 115 120 110 110 105 100 100 90 95 90 80 2005 2006 2007 2008 2009 2010 2011 2012 2
Slide 17: APRR Financial performance
APRR Financial performance Revenue and EBITDA growth underpinned by positive traffic performance and toll increases 5 year financial performance (€m) FY18 financial performance 73.2% 73.8% 71.8% 72.4% 75% Revenue performance was driven by traffic growth, toll increases 3,000 70.7% and favourable t
Slide 18: APRR Earnings stability
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 €1,400m 1,520 1,475 1,399 1,428 2.0% 1,326 €1,200m 1,265 1,208 1,244 €1,000m 1,068 0.0% 3 941 974 888 924 €800m 841
Slide 19: APRR Operational update
APRR Operational update Ongoing commitment to enhancing operations and service • Continued optimisation of toll collection through automation: — 99.4% automated transactions (vs. 98.9% in 2017) Operations — 58.7% ETC1 transactions (vs. 57.6% in 2017) — 2.7 million active transponders (Liber-t badges
Slide 20: APRR Capital projects
APRR Capital projects Continued investment into growing and improving the existing network Growth within the APRR footprint 50km of the APRR network added since 2015 A total of 50km of network has been added since 2015, including 5.5km of new motorway added in Mar 2018: A6-A89 link west of Lyon FR
Slide 21: APRR Group financing costs
APRR Group financing costs Capital management initiatives continued in 2018 APRR Group interest expense APRR / Eiffarie debt breakdown4 APRR Group net interest expense decreased by €123m or 35% compared to FY17 APRR Eiffarie floating €150m of floating EIB1 facilities with an average margin of 0.
Slide 22: APRR Group debt profile
APRR Group debt profile Sustainable debt maturity profile with strong liquidity position APRR is investment grade credit rated A- Stable Outlook by both S&P (rating re-affirmed in Nov 18) and Fitch (rating re-affirmed in Jul 18)1 APRR Group Net Debt balance of €8.3bn2 as at 31 Dec 2018; represen
Slide 23: ADELAC 2018 results
ADELAC 2018 results1 • Performance benefitted from Financial performance (€m) vs traffic (ADT) Traffic continued growth in commuter traffic, partially offset by 1.2% 29,713 ADT2 disruption caused by “Yellow 29,713 29,3743 Vests” protests during 4Q18 28,751 70 27,524 26,238 56.1 27,000 54.4 60 51.4 4
Slide 24: Warnow 2018 results
Warnow 2018 results1 • Traffic benefitted from Financial performance (€m) vs traffic (ADT) Traffic temporary construction 12,948 10.5% 12,948 ADT2 works on competing routes in and around Rostock 14 11,537 11,715 12.6 11,358 12,000 10,917 11.14 12 10.7 2.9 10.1 10,000 10 9.5 2.8 • Revenue growth 2.9
Slide 25: Dulles Greenway 2018 results
Dulles Greenway 2018 results1 Workday traffic performance Non-Workday traffic performance Traffic ADT (’000s) ADT (‘000s) 4.5% 50,193 ADT2 65.0 +5.3% -1.6% 34.0 +6.4% +1.6% +0.1% +5.0% 62.4 33.2 33.3 -3.5% 60.0 61.4 -4.9% 32.0 32.7 +2.6% +4.4% 32.1 59.3 58.4 55.0 56.5 30.0 30.7 Revenue 50.0 28.0 1.4
Slide 26: Dulles Greenway Traffic
Dulles Greenway Traffic Traffic at the Greenway during 2018 was impacted by improvements to the surrounding network, adverse weather conditions and partial federal government shutdowns Improvements to the surrounding network continued to have a negative Dulles Greenway and competing network impact
Slide 27: Dulles Greenway Financial performance
Dulles Greenway Financial performance Greenway’s revenue and EBITDA during 2018 were negatively impacted by traffic performance, partially offset by toll growth and cost management Revenue was impacted by decreased traffic volume, partially offset by toll increases1 in Mar 2018 FY18 EBITDA2 marg
Slide 28: Dulles Greenway Operational update
Dulles Greenway Operational update Business improvement initiatives to optimise Greenway’s performance continue • Continued optimisation of toll collections through increased use of automated transactions in 2018: Operational - 93.8% automated transactions (2017: 93.3%) - 84.5% Automatic Vehicle Ide
Slide 29: Dulles Greenway TRIP II debt
Dulles Greenway TRIP II debt Fixed-rate debt profile at TRIP II for the duration of the concession US$1.0bn of total gross outstanding debt with fixed amortisation profile until 2056 Distribution lock-up Ratio as at tests 31 Dec 18 ̶ Bonds rated BBB- by S&P (re-affirmed in Feb 2019), Ba1 by Moody’
Slide 30: Internalisation Update
04 Internalisation Update Graeme Bevans, Chief Executive Officer Elect
Slide 31: Update on internalisation
Update on internalisation Progress towards internalisation well advanced • Strong core group of highly experienced executives are now in place Recruitment • Permanent offices in Melbourne well established • Office in Luxembourg established and recruitment of team almost complete • IT infrastructure
Slide 32: Management team post internalisation
Management team post internalisation New team provide the calibre, depth of experience and diversity to successfully manage ALX Graeme Bevans Chief Executive Officer Clayton McCormack Nadine Lennie Vincent Portal-Barrault General Counsel & Chief Financial Officer Chief Operating Officer Company Secr
Slide 33: Management team post internalisation
Management team post internalisation Recruitment of Executive Management Team for ALX post internalisation now complete Executive Management Team Graeme Bevans, Chief Executive Officer Commenced May 2018 Strong track record in infrastructure investment globally Led CPPIB and IFM infrastructure
Slide 34: Management team post internalisation
Management team post internalisation Executive Management Team (continued) Vincent Portal-Barrault, Chief Operating Officer Commenced with ALX in Dec 2018 Joined from Macquarie Group in France and brings exceptional knowledge of APRR, having been responsible for the management of APRR for the pa
Slide 35: Strong team of senior personnel
Strong team of senior personnel Arnim Berger Operational Management, formerly Vinci in Germany and Greece Michael Coutts Financial Analysis, formerly Credit Suisse Kylie Ramsden Investor Relations / Communications, formerly Charter Hall Group & Macquarie Ryan Reynolds Traffic Forecasting, fo
Slide 36: Management team post internalisation
Management team post internalisation Page 36
Slide 37: Management arrangements
Management arrangements Management arrangements facilitate a smooth transition Recap of management arrangements Macquarie continues to provide full suite of management services up to 15 May 2019 Macquarie continues to receive a base management fee until 15 May 2019, even if the Management Agreem
Slide 38: Strategy
Strategy Maximising long term securityholder value • Complete the transition to internalisation Internalise • Streamline the current structures where possible • Disciplined capital management Manage • Active operational management to drive performance and improved user experience • Accretive investm
Slide 39: Appendix
05 Appendix
Slide 40: Dulles Greenway toll regime
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 annually a
Slide 41: Cash flow: APRR to ALX securityholders
Cash flow: APRR to ALX securityholders Cash flow: APRR to ALX securityholders Eiffarie / Financière Eiffarie (FE) APRR dividend A add APRR tax instalments to FE B add Other1 C less Eiffarie interest / reserve D less FE tax payments / provisions E Distributable cash F=A+B+C–D–E less Debt repayment /
Slide 42: Cash flow: APRR to ALX securityholders
Cash flow: APRR to ALX securityholders Cash flow: APRR to ALX securityholders Eiffarie / Financière Eiffarie (€m) (100%) 2H16 1H17 2H17 1H18 2H18 APRR dividend 6401 326 365 400 381 add APRR tax instalments to FE 159 217 222 246 204 add Other2 (128)3 (7) 74 (0) 0 less Eiffarie interest / reserve (88)
Slide 43: ALX statutory accounts
ALX statutory accounts Statutory accounts for the year ended 31 Dec 2018 Statutory accounting • ALX equity accounts its investment in APRR and consolidates the results of Dulles Greenway and Warnow Tunnel, which are both controlled following the acquisition of the remaining 50% estimated economic in
Slide 44: Proportionately consolidated financial performance
Proportionately consolidated financial performance Actual Pro forma Actual A$m year ended 31 Dec 18 year ended 31 Dec 171 Change vs pcp year ended 31 Dec 172 Proportionate revenue 1,162.3 1,116.7 4.1% 878.2 Proportionate operating expenses (292.8) (287.4) (1.9%) (225.4) Proportionate EBITDA from ass