Atlas Arteria · ASX:ALX
Atlas Arteria — Macquarie Atlas Roads — Investor Presentation (March 2015)
63 slides from Atlas Arteria's investor presentation, Mar 6, 2015
Slide 1: ASX Release: Investor Presentation – March 2015
Macquarie Atlas Roads Limited Macquarie Atlas Roads International Limited ACN 141 075 201 EC43828 Level 7, 50 Martin Place Telephone 612 8232 3333 The Belvedere Building SYDNEY NSW 2000 Facsimile 612 8232 4713 69 Pitts Bay Road GPO Box 4294 Internet: www.macquarie.com/mqa Pembroke HM08 SYDNEY NSW 11
Slide 2: Macquarie Atlas Roads Investor Presentation March 2015
Macquarie Atlas Roads Investor Presentation March 2015
Slide 3: Important notice and disclaimer
Important notice and 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
Slide 4: 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 h
Slide 5: Table of Contents
Table of Contents 01 Overview 4 02 APRR 10 03 Other Assets 31 04 Distributions 44 Appendix 51 MACQUARIE ATLAS ROADS PAGE 3
Slide 6: Overview
1 Overview MACQUARIE ATLAS ROADS
Slide 7: MQA overview
MQA overview Global toll road operator and developer listed on ASX (Top 200) with market capitalisation of A$1.68bn1 MQA 20.14% 50.0%2 Various % Dulles 4 Other APRR Greenway Toll Roads A 2,278km motorway network in A 22km commuter route into Located in US and Europe Eastern France Washington D
Slide 8: MQA portfolio
MQA portfolio MQA’s toll road investments are located in France, UK, USA and Germany (50%)2 (100%)3 (25%)1 (22.5%) (20.14%) (70%) 1. MQA holds a 25% interest in ITR, however the beneficial interest is 0% as MQA is no longer expected to be exposed to any significant variable returns from ITR’s ongoin
Slide 9: MQA value proposition
MQA value proposition Distributions underpinned by operational performance Distribution growth Capital growth Distribution growth underpinned by operational growth and capital structure optimisation Undistributed asset level cash re-invested (funds capex and debt reduction) Growth opportunit
Slide 10: MQA evolution since listing
MQA evolution since listing Today, MQA’s focus is 2010 – 2013 2014 on growing distributions and growing the value of its portfolio Listed on ASX on January Acquisition of additional APRR MQA Distributions (cps) 2010 stake, funded by a A$60m Focus on value recovery placement 10.02 APRR minori
Slide 11: 2014 snapshot
2014 snapshot Growth in portfolio traffic, revenue and EBITDA levels Traffic1 Revenue1 EBITDA1 +1.7% +2.6% +3.3% 2014 Statutory results summary Loss from continuing operations: A$50.6m (2013: A$41.9m profit) 2014 Portfolio highlights Traffic, revenue, EBITDA increasing on 2013 levels across all
Slide 12: APRR
2 APRR MACQUARIE ATLAS ROADS
Slide 13: APRR overview
APRR overview Concession 31 December 2032 (APRR, AREA) expiry 31 December 2060 (ADELAC) 31 December 2068 (Maurice Lemaire Tunnel) Tolling 2014-18: annual tariff increase (February) of 85% of CPI (ex. tobacco) + 0.37% for APRR and 85% of CPI (ex. tobacco) + 0.41% for AREA under Contrats de Pl
Slide 14: APRR concessions
APRR concessions APRR comprises four concessions APRR Concession Expiry: 2032 Road Length: 1,854km AREA Concession Expiry: 2032 Road Length: 394km ADELAC (50%) Concession Expiry: 2060 Road Length: 19km ML TUNNEL Concession Expiry: 2068 Road Length: 11km MACQUARIE ATLAS ROADS PAGE 12
Slide 15: APRR performance
APRR performance Growth maintained through economic cycles APRR EBITDA (€m)1 and France GDP growth (%)2 €1,750m 3.0% 1,520 €1,500m 1,428 1,475 2.0% 1,399 1,326 1,244 1,265 €1,250m 1,208 1.0% €1,000m 0.0% €750m (1.0%) €500m 1,068 (2.0%) 888 924 9413 974 841 €250m (3.0%) €0m (4.0%) 2001 2002 2003 2004
Slide 16: APRR performance (cont'd)
APRR performance (cont’d) 2014 revenue supported by toll increases in February 2014 of 0.80% for APRR and 0.84% for AREA 12 months to 31 December 2014 Traffic: +1.6%; Revenue: +2.4%; EBITDA: +3.0% Financial Performance (€m)1 Quarterly Traffic Performance (VKTm) 7,000 69.2% 70.0% 70.3% 70.7% 68.4%
Slide 17: APRR traffic analysis
APRR traffic analysis 12 months to 31 December 2014 Revenue and traffic analysis 2014 – LV traffic up 1.6% vs pcp – HV traffic up 1.5% vs pcp 3% 15% Positive performance despite challenging LV 32% Traffic HV Revenue economic environment Other Revenue 95.1% transactions automated in 2014 65% 85%
Slide 18: APRR traffic – light vehicles
APRR traffic – light vehicles Light vehicle traffic has outperformed GDP Contribution from growth of real household disposable income APRR Light vehicles and economic indicators1,2 110 105 100 95 90 85 80 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 LV Traffic GDP Disposable Income 1. Moving
Slide 19: APRR traffic – heavy vehicles
APRR traffic – heavy vehicles Heavy vehicles correlated to French manufacturing Foreign trade volumes an additional factor APRR Heavy vehicles and economic indicators1,2 110 100 90 80 70 60 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HV Traffic Imports Manufacturing 1. Moving 12 month averag
Slide 20: APRR operations
APRR operations Operating expenses (ex. operating taxes) have decreased since 2006 Headcount (FTE)1 at 31 December 2014 was 3,534 (2013: 3,591) €800m 80.0% 69.2% 70.0% 70.3% 70.7% 67.0% 67.8% 68.0% 68.4% 64.0% €600m 60.0% 2 3 3 232 229 231 236 240 264 258 275 292 €400m 40.0% 153 162 149 139 156 14
Slide 21: APRR cash flow to MQA
APRR cash flow to MQA Potential to improve overall financing terms over time Simplified holding structure MQA HoldCo debt 20.14% of free cash flow – Margin 100bps Eiffarie HoldCo swap until June 2018 – Fixed principal repayments1 ‒ Average of €3,315m swapped – Five year term with two extensions (Hol
Slide 22: APRR profit
APRR profit EBITDA growth and interest savings for 2014 are offset by higher provision and income tax €550m 14 €500m 41 50 12 17 61 2 €450m 8 26 16 45 442 56 420 €400m 392 D&A, provisions, other1 D&A, provisions, other Operating taxes Operating taxes Net profit 2012 Net profit 2013 Net profit 2014 €
Slide 23: APRR/Eiffarie – refinancing completed
APRR/Eiffarie – refinancing completed €3.3bn refinancing plan successfully completed for APRR/Eiffarie Eiffarie has secured a €1.5bn five year term loan with two extensions of one year each Proceeds of the new loan, together with a ~€1.0bn dividend from APRR, have been applied to repay existing
Slide 24: Eiffarie refinancing – cash flow considerations
Eiffarie refinancing – cash flow considerations Internal restructure Eiffarie Loan Repayment Profile In 2H 2014, APRR undertook an internal restructure, which Repayment Date Instalment (€m) created a ~€1bn reserve at APRR. APRR paid a dividend from this reserve, which was applied to repay part of
Slide 25: APRR/Eiffarie debt maturity profile
APRR/Eiffarie debt maturity profile Strong liquidity position with financing costs expected to continue to reduce Eiffarie term loan facility successfully refinanced with an initial five year term plus two one year extensions Pro Forma APRR/Eiffarie Debt Maturity Profile (€m)1 2,500 4,000 3,906 As
Slide 26: APRR bond issues
APRR bond issues APRR issued €2.4bn bonds during 2014 €500m at 2.25% due 2020 €700m at 1.125% due 2021 €500m FRN at Euribor+75bps due 2019 €700m at 1.875% due 2025 S&P upgraded APRR’s credit rating to BBB+ (stable outlook) in November 2014 APRR Bonds: Mid-Yield to maturity1 6.0% 5.0% 4.0%
Slide 27: APRR free cash flow
APRR free cash flow FE distributions, and therefore MQA distributions, reflect only a portion of APRR free cash flow APRR consistently generates cash flow in excess of net profit. The excess is used to fund capex and debt repayments at the APRR level 100% of APRR profit is distributed to Eiffari
Slide 28: APRR capital expenditure
APRR capital expenditure Since 2006, ~€3.5bn has been spent to grow, improve and maintain the network €600m €500m 24 81 €400m 65 45 159 €300m 187 93 343 44 303 27 54 69 215 €200m 75 240 171 168 172 165 104 123 66 139 €100m 100 110 122 115 102 115 108 78 94 93 92 57 €0m 2003 2004 2005 2006 2007 2008
Slide 29: APRR management contracts
APRR management contracts Widening projects 1. A6 at Auxerre (Southbound) 2. A71 north of Clermont- 1 Ferrand (Northbound) 3. A41 north of Annecy (both directions) SWITZERLAND Other projects 2 4. A89-A6 link road 4 3 construction north of Lyon 5. A43/A41/Chambery high 5 speed urban road ITALY interc
Slide 30: APRR/Eiffarie – political issues overview
APRR/Eiffarie – political issues overview Background to recent events • In September 2014, the French competition authority released a report which raised concerns regarding the profitability of French motorways. The report subsequently led to negative media and political attention • An escalation o
Slide 31: APRR/Eiffarie – political issues (cont'd)
APRR/Eiffarie – political issues (cont’d) APRR/AREA continue to work with the French State and are optimistic that a mutually acceptable outcome will be reached APRR’s concession contract offers strong protection mechanisms: – Contract can be amended only through mutual agreement – Any change to t
Slide 32: APRR/Eiffarie ownership structure
APRR/Eiffarie ownership structure Ownership Ownership structure July 2014 – MQA acquired an additional 1.41% Third Party Other Macquarie interest in MAF2, increasing its stake to 40.29% MQA Investors Managed Funds – Represents a 0.71% indirect interest in APRR, 40.29% 27.16% 32.55% increasing MQA’
Slide 33: Other Assets
3 Other Assets MACQUARIE ATLAS ROADS
Slide 34: Dulles Greenway overview
Dulles Greenway overview Concession 15 February 2056 expiry From 2014 to 2020, tolls escalate by greater of CPI +1%, Real GDP or 2.8% By application to the SCC thereafter Tolling Current tolls for mainline plaza two-axle vehicles (effective March 2015): – Peak: US$5.20 – Off-peak: US$4.30 Ow
Slide 35: Dulles Greenway – performance
Dulles Greenway – performance Revenue growth and effective cost control have led to consistent growth in EBITDA Improving traffic trends evident since 2012 Regional development anticipated to support traffic growth over the longer term EBITDA (US$m) vs Traffic (ADT) US$m ADT 90 50,000 80 49,000
Slide 36: Dulles Greenway – performance (cont'd)
Dulles Greenway – performance (cont’d) Strong performance reflecting improving economic conditions and continued corridor growth 12 months to 31 December 2014 Traffic: +3.0%; Revenue: +5.3%; EBITDA: +7.1% Financial Performance (US$m)1 Quarterly Traffic Performance (ADT) 80.5% 78.5% 79.8% 52,000 77
Slide 37: Dulles Greenway traffic corridor
Dulles Greenway traffic corridor Dulles Greenway well placed to provide capacity 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 Route 7 (6 lanes)
Slide 38: Dulles Greenway corridor
Dulles Greenway corridor Demographic factors expected to progressively increase congestion in corridor Corridor Population Growth p.a.%1 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Loudoun County Fairfax Co./Fairfax Arlington County Washington D.C. City/Falls Church 2010-15 2015-20 2020-25 2025-30 2030-35 20
Slide 39: Dulles Greenway corridor
Dulles Greenway corridor ~64% of Greenway traffic connects with the Dulles Dulles Corridor Metrorail Project Toll Road (DTR) Phase 1 – East Falls Church Station to Wiehle Ave ~22% of Greenway traffic connects with Route 28 (Reston) Phase 2 – Wiehle Ave (Reston) to Dulles Airport/Route 772 ~14% o
Slide 40: Dulles Greenway – other developments
Dulles Greenway – other developments Distribution outlook No distributions expected before 2019 State Corporation Commission (SCC) hearings The Greenway has undergone an extensive regulatory hearing process with the SCC during 2013 and 2014 with respect to the current toll rate structure. The SC
Slide 41: Dulles Greenway 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) 250 500 Maturity profile for external debt as at 31 December 2014 (excl. future capitalised interest) 450 200 Total future curre
Slide 42: Chicago Skyway
Chicago Skyway Concession • 24 January 2104 expiry Set schedule from 2005 to 2017 After 2017, tolls can escalate annually by the greater of 2%, CPI or nominal GDP per capita Tolling Current tolls (effective January 2015): – Light vehicles: US$4.50 – Heavy vehicles (off peak): US$3.60 per axle1
Slide 43: Indiana Toll Road
Indiana Toll Road Concession 29 June 2081 expiry Tolls increase annually on 1 July by the greater of 2%, CPI or nominal GDP per capita Tolling State subsidised ‘toll freeze’ for passenger vehicles using ETC scheduled to remain in place until 2016 Ownership 25% (25% MIP; 50% Cintra) Length
Slide 44: Warnow Tunnel
Warnow Tunnel Concession 15 September 2053 expiry Tolling linked to pre-tax equity IRR – IRR <17%: tolls may rise at a rate higher than inflation – IRR 17%-25%: tolls linked to inflation – if IRR >25%: tolls remain fixed Tolling Toll increases subject to toll application audit by the Land Mini
Slide 45: M6 Toll
M6 Toll Concession 31 January 2054 expiry Tolling Market based tolling Ownership 100%1 Length 43 km Bypasses the city of Birmingham and the M6 motorway, one of the most congested Location / motorways in the UK Strategic attraction Significant industrial, housing and economic development
Slide 46: Distributions
4 Distributions MACQUARIE ATLAS ROADS
Slide 47: MQA distribution framework
MQA distribution framework MQA will pass through receipts originating from APRR, after addressing corporate requirements Corporate requirements include: – Corporate expenses (including base fees and any performance fees paid in cash) – Maintaining a prudent capital reserve Cash flow originating
Slide 48: MQA distributions
MQA distributions 1H 2015 distribution guidance of 6.0 cps Subject to foreign exchange movements (FX) and unforeseen events Expect to declare mid March and pay end March Wholly from MARIL, anticipated to include foreign dividend and capital return components1 Distribution reconciliation A$m Ma
Slide 49: MQA distribution
MQA distribution MQA distributions supported by cash originating from APRR APRR APRR Profit APRR Profit Profit 1H 2014 2H 2014 Eiffarie +Tax Grouping 2H 2014 1H 2015 - Debt Service Eiffarie Cash Flow Eiffarie Cash Flow MQA 1H 2015 2H 2015 + Other Receipts - Corporate Expenses MQA Distribution MQA Di
Slide 50: Cash flow: APRR to MQA shareholders
Cash flow: APRR to MQA shareholders Cash flow: APRR to MQA shareholders Eiffarie/Financière Eiffarie APRR dividend A add APRR tax instalments to FE B add Other1 C less Eiffarie net interest D less FE tax payments/provisions E less Contractual debt repayment F Cash available to Eiffarie/FE shareholde
Slide 51: Cash flow: APRR to MQA shareholders (cont'd)
Cash flow: APRR to MQA shareholders (cont’d) Cash flow: APRR to MQA shareholders Eiffarie/Financière Eiffarie (€m) 1H 2013 2H 2013 1H 2014 2H 2014 APRR dividend 188 213 241 209 add APRR tax instalments to FE 125 120 196 147 add Other1 (23) 5 (2) (1) less Eiffarie net interest (101) (123) (118) (120)
Slide 52: MQA free cash flow
MQA free cash flow Cash flow: APRR to MQA shareholders FY 2014 APRR free cash flow (€m) 821 Eiffarie net interest (€m) (238) Eiffarie/FE opex (€m) (1) Tax grouping (€m) 245 Consolidated free cash flow (€m) 827 MQA’s proportionate share in € (20.14%) (€m) 167 MQA’s proportionate share in A$ (20.14%)1
Slide 53: Appendix
A APPENDIX MACQUARIE ATLAS ROADS
Slide 54: Register analysis
Register analysis1 Retail 8% Macquarie 2 18% Other Foreign Institutions 15% Lazard 9% Goldman Sachs 7% Other Australian Institutions 43% 1. Register data as at 31 January 2015. Substantial shareholdings based on most recent notices (as of 27 February 2015). For substantial notices prior to 4 Septemb
Slide 55: MQA governance
MQA governance MQA has majority independent Boards and independent Chairmen Base fee calculated quarterly on market capitalisation MQA structure Macquarie Market capitalisation Base management fee1 Resources Up to A$1.0bn 1.75% plus (Staff, premises, IT, etc) More than A$1.0bn 1.00% 100% MQA Stapl
Slide 56: MQA performance
MQA performance MQA has outperformed its Benchmark by 382% since listing1 Three performance fees have been calculated to date MQA vs benchmark – 2010 performance fee: A$12.5m A$3.50 MQA Market Volume (m) (RHS) 21.0 – 2011 performance fee: A$50.1m MQA Share Price (LHS) 3 – 2014 performance fee: A$5
Slide 57: Consolidated profit & loss account
Consolidated profit & loss account Statutory accounts – year ended 31 December 2014 Year ended Year ended Revenue includes M6 Toll management A$m 31 Dec 14 31 Dec 13 fee income (annual fee of £750,000 Revenue 2.1 0.9 indexed, paid in July and January) and interest income Performance fees (58.2) -
Slide 58: Consolidated balance sheet
Consolidated balance sheet Statutory accounts – as at 31 December 2014 As at As at Investments in associates includes APRR A$m 31 Dec 14 31 Dec 13 and Dulles Greenway accounted for Current assets 31.0 17.8 using the equity method Investments in associates 835.4 862.7 Current liabilities includes
Slide 59: MQA cash flow summary
MQA cash flow summary Year to Year to Distributions from Financière Eiffarie of Available cash (A$m) 31 Dec 14 31 Dec 13 €25.6m in March 2014 and €40.0m in Opening balance – 1 January 17.7 13.7 September 2014 Distributions from APRR 96.6 48.8 M6 Toll management fee 0.8 - Reduction in management
Slide 60: Traffic and toll revenue performance
Traffic and toll revenue performance Year to Year to Change vs Quarter vs pcp Asset 2014 2013 pcp Mar-14 Jun-14 Sep-14 Dec-14 APRR Light Vehicle VKT (millions) 18,423 18,126 1.6% 0.5% 3.2% 0.6% 2.6% Heavy Vehicle VKT (millions) 3,237 3,190 1.5% 1.9% 2.4% 1.2% 0.4% Total VKT (millions) 21,660 21,315
Slide 61: Asset debt metrics
Asset debt metrics Net debt/ EBITDA/ As at 31 Dec 141 Gross debt Cash Net debt EBITDA Interest DSCR Lock-up Hedging APRR/Eiffarie2 €m 11,345.3 2,369.2 8,976.2 5.90x n/a 2.31x 1.60x 98.1% - APRR €m 8,830.0 2,104.9 6,725.1 4.42x 4.59x n/a n/a n/a - Eiffarie €m 2,515.3 264.2 2,251.1 n/a n/a n/a n/a n/a
Slide 62: Asset debt maturity profile and ratings
Asset debt maturity profile and ratings As at 31 Dec 141 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025+ APRR/Eiffarie €m 1,341.2 1,242.8 3,906.3 1,211.0 1,079.2 579.4 762.4 125.2 5.0 5.3 717.5 Dulles Greenway US$m 58.5 55.8 52.7 40.5 38.9 20.4 23.8 40.9 38.8 36.7 618.2 Chicago Skyway US$m 1
Slide 63: European economy outlook
European economy outlook French economy remains weak, as does Europe generally France, Germany and Eurozone GDP forecasts1 2.00% 1.50% 1.00% 0.50% 0% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 France Germany Eurozone 1. Sources: 2015-2016: Consensus Economics February 2015 report, 2017+: Cons
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