Atlas Arteria · ASX:ALX

Atlas Arteria — Macquarie Atlas Roads — FY2017 Earnings Presentation

40 slides from Atlas Arteria's earnings presentation, Feb 28, 2018

1. Slide 1: 2017 Full Year Results Presentation

   Macquarie Atlas Roads 2017 Full Year Results Presentation 28 February 2018

2. Slide 2: 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

3. 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

4. Slide 4: Contents

   Contents 01 Insert divider title Overview 3 01 A James Insert Hooke, divider title 47 Chief Executive Officer Financial Performance 02 Mark Goodrick, 11 Chief Financial Officer Asset Review 03 James Hooke, 16 Chief Executive Officer 04 Appendix 34

5. Slide 5: Overview

   Overview 01 James Hooke, Chief Executive Officer

6. Slide 6: 2017 highlights

   2017 highlights MQA’s portfolio continued to deliver growth in 20171 • Positive asset performance during 2017 ▲2.7% Traffic ─ Continued growth in weighted average traffic, revenue and EBITDA across MQA’s portfolio ─ Further margin improvement through operational efficiencies • Continued portfolio co

7. Slide 7: 2017 portfolio asset performance

   2017 portfolio asset performance APRR ADELAC Dulles Greenway Warnow APRR 85% of MQA EBITDA1 2% of MQA EBITDA1 12% of MQA EBITDA1 1% of MQA EBITDA1 7.0% 5.8% 1.3% 5.8% 5.3% 1.1% 5.0% 4.2% 3.2% 1.5% 2.2% 1.3% Traffic Revenue EBITDA Traffic Revenue EBITDA Traffic Revenue EBITDA Traffic Revenue3 EBITDA3

8. Slide 8: 2017 key activities

   2017 key activities 2017 was a transformative year for MQA Greenway acquisition M6 Toll divestment APRR additional APRR credit rating Management Acquisition of the MQA divested its acquisition upgrade internalisation remaining 50.0% nominal interest in the Acquisition of additional Fitch upgrades AP

9. Slide 9: Change in management arrangements

   Change in management arrangements In November 2017, the Boards announced the intention to transition to an internalised management structure • The Independent Directors of MQA continue discussions with Macquarie to determine the optimal internalisation path ̶ Independent advisers engaged ̶ Committee

10. Slide 10: Delivering on strategy

    Delivering on strategy To generate long term value for MQA securityholders via investment in quality infrastructure assets providing access to long-dated, predictable and growing cash flows  Continued focus on growing distributions and enhancing MQA Portfolio portfolio value via: ̶ Active asset man

11. Slide 11: Macroeconomic environment

    Macroeconomic environment MQA’s asset portfolio is positioned for a rising inflationary environment CPI-linked tolling ~74% of MQA debt is Long-dated debt Portfolio asset escalation1 benefits currently fixed rate / maturities reduce deleveraging driven from a rising inflation hedged2 reducing refina

12. Slide 12: Financial Performance

    Financial Performance 02 Mark Goodrick, Chief Financial Officer

13. Slide 13: Consolidated income statement

    Consolidated income statement Statutory accounts 12 months ended 12 months ended 31 December 2017 31 December 2016 MQA Dulles MQA MQA A$m Corporate Greenway7 Total Total Total revenue and other income 395.81 77.2 473.0 70.6 Share of net profits of associates 188.02 - 188.0 330.0 Performance fees (8.

14. Slide 14: Consolidated balance sheet

    Consolidated balance sheet Statutory accounts As at As at 31 December 2017 31 December 2016 MQA Dulles MQA MQA A$m Corporate Greenway4 Total Total Current assets 40.41 83.8 124.2 224.2 Investments in associates 1,483.3 - 1,483.3 950.9 Tolling concessions - 2,189.7 2,189.7 - Goodwill - 58.7 58.7 - Ot

15. Slide 15: MQA corporate cash flow summary

    MQA corporate cash flow summary Available cash (A$m) 2017 2016 1. Distributions from Financière Eiffarie (FE) of €54.8m Opening balance – 1 January 223.4 65.4 in March 2017 and €47.1m in September 2017. Proceeds from Chicago Skyway sale - 137.3 2. Transfer of 100% ordinary equity interest in the M6

16. Slide 16: MQA distributions

    MQA distributions FY 2018 distribution guidance increased1 to 24.0 cps MQA Distributions (cps) • Representing a 20.0% increase on 2017 distribution paid and 1H 2H Guidance an increase on previous guidance 12.0 • Distributions underpinned by APRR earnings 10.0 • Subject to asset performance, foreign

17. Slide 17: Asset Review

    Asset Review 03 James Hooke, Chief Executive Officer

18. Slide 18: APRR 2017 results

    APRR 2017 results1 Record earnings performance underpinned by continued growth across light and heavy vehicle traffic VKTbn Light Vehicles VKTbn Heavy Vehicles ▲3.2% Traffic 20.5 +2.8% 3.8 +5.9% 23.8bn VKT2 3.7 20.0 20.1 3.7 +3.6% 3.6 19.5 19.6 +4.5% 3.5 3.5 19.0 +2.6% 3.4 ▲4.2% Revenue 18.9 +2.9% +

19. Slide 19: APRR earnings stability

    APRR Earnings stability Continued earnings resilience through economic cycles, with over 50 years of operating history and earnings growth APRR EBITDA1 and France GDP2 growth €m 1,800 6.0% 1,775 1,600 EBITDA CAGR 2001-2017: 1,685 4.8% 1,589 4.0% 1,520 1,400 1,475 1,399 1,428 1,326 1,200 1,244 1,265

20. Slide 20: APRR French macroeconomic environment

    APRR French macroeconomic environment APRR remains well positioned to benefit from further improvements in French economic activity Household disposable income and APRR light vehicle traffic1 Import, manufacturing and APRR heavy vehicle traffic1 120 120 110 110 100 100 90 90 80 2005 2007 2009 2011 2

21. Slide 21: APRR financial performance

    APRR Financial performance Stable revenue growth with ongoing cost management 5 Year Financial Performance (€m) 2017 Financial Performance 72.4% 73.2%  Earnings performance attributable to traffic growth, 75% 71.8% 70.7% 3,000 70.3% 70% favourable traffic mix (strong growth in heavy vehicle 2,425 t

22. Slide 22: APRR profitability

    APRR Profitability Record 2017 net profit, increasing 5.3% on 2016 and underpinning distributions to MQA  Driven predominantly by higher revenue and net interest savings  Partially offset by increased tax due to a one-off additional exceptional tax1 APRR Profit Waterfall2 (€m) 1 8 17 54 92 10 97 7

23. Slide 23: APRR operations

    APRR Operations Commitment to enhancing operations and service Harnessing Technology Network Improvement Customers and Employees  Optimisation of toll collection through  26km of motorway added to network:  Customer satisfaction ratings >95% automation in 2017: A480 (AREA) and A75 (APRR)2  Named

24. Slide 24: APRR capital projects

    APRR Capital projects Continued investment into growing and improving the existing network Additional sections added in last three years 44km, or 2% of network, added in last three years  APRR has added 44km under the 2014-18 Management Contract and 2015 Stimulus Package over the last three years:

25. Slide 25: APRR debt profile

    APRR Debt profile Extended average debt maturity profile with strong liquidity position • APRR/Eiffarie Net Debt balance of €8.4 billion1; representing 4.8x Net Debt / EBITDA ̶ €1.3bn of debt issued by APRR in 2017 at a weighted average cost of 1.6% and maturity of ~15 years ̶ Opportunity to continu

26. Slide 26: APRR French taxation update

    APRR French taxation update APRR to benefit from recently announced changes to French taxation • APRR Group to benefit from reduction in French corporate income tax rate from 33.3% to 25.0% by 20221 ̶ Including the additional social surcharge of +3.3%, APRR’s applicable tax rate will reduce from 34.

27. Slide 27: Dulles Greenway 2017 results

    Dulles Greenway 2017 results1 Workday Traffic Performance Non-Workday Traffic Performance ▼1.3% Traffic ADT ‘000s ADT ‘000s 52,555 ADT2 64 34 +5.3% +1.6% +0.1% -1.6% +6.4% 62 62.4 33 33.2 33.3 61.4 32.7 60 +5.0% 32 ▲1.3% Revenue 59.3 +4.4% 58 31 US$92.2m +2.6% 30.7 56 56.5 30 +1.3% +2.0% 55.1 29.4 5

28. Slide 28: Dulles Greenway performance

    Dulles Greenway Performance Continued earnings growth, despite reduced traffic levels  2017 traffic impacted by surrounding network changes and construction works (refer slide 28)  Continued revenue and EBITDA growth, largely attributable to March toll increase of ~2.8%  81.4% EBITDA margin, broa

29. Slide 29: Dulles Greenway corridor development

    Dulles Greenway Corridor development Local network developments have resulted in continued traffic volatility  1H18 Greenway traffic is currently anticipated to decline by approximately 5% on pcp (excluding possible weather impacts) driven by network changes. In 2H18, Greenway’s performance is anti

30. Slide 30: Dulles Greenway operational and development update

    Dulles Greenway Operational and development update Capital improvements expected to commence in 2018, including widening of DTR connector to add capacity and ease east-bound congestion DTR Connector project DTR Connector project overview • ~3km widening of the connection to the Dulles Toll Greenway

31. Slide 31: Dulles Greenway operations

    Dulles Greenway Operations 100% operational control provides strengthened commitment to enhancing operations and service Harnessing Technology Operational Improvement People and Safety  Optimisation of toll collection through  81.4% EBITDA margin  No lost time injuries in 2017 increased use of au

32. Slide 32: ADELAC 2017 results

    ADELAC 2017 results1 5 Year Financial Performance (€m) vs Traffic (ADT) ▲2.2% Traffic  Traffic performance underpinned by 29,381 29,381 ADT 70 28,751 increased weekday 27,524 commuter usage 25,179 26,238 27,000 54.4 60 51.4 47.8 50 44.4 9.7 22,000 41.5 9.6 9.1 8.9  Performance attributed 40 ▲5.8%

33. Slide 33: Warnow 2017 results

    Warnow 2017 results1 5 Year Financial Performance (€m) vs Traffic (ADT) ▲1.5% Traffic  Traffic growth reflective of increased usage and 11,715 11,358 11,537 11,715 ADT 14 12,000 construction activities on 10,738 10,917 competing routes 11,000 12 11.2 10.7 10.1 10,000 9.5 10 9.0 3.3 9,000 3.2 2.8 8,

34. Slide 34: Summary

    Summary MQA continues to deliver on its strategy to increase returns to securityholders Active asset management Disciplined capital management Financial performance Continual investment Investment opportunities Distribution growth  Growth in aggregate  Consolidation of portfolio  Further investme

35. Slide 35: Appendix

    ©) MACQUARIE \y My i pea alii Sees ~ WU AAA ry | O04 Appendix

36. Slide 36: Cash flow: APRR to MQA securityholders

    Cash flow APRR to MQA securityholders Cash flow: APRR to MQA securityholders Eiffarie/Financière Eiffarie (FE) APRR dividend A add APRR tax instalments to FE B add Other1 C less Eiffarie net interest D less FE tax payments/provisions E Distributable cash F=A+B+C–D–E less Debt repayment G Cash availa

37. Slide 37: Cash flow: APRR to MQA securityholders

    Cash flow: APRR to MQA securityholders Cash flow: APRR to MQA securityholders Eiffarie/Financière Eiffarie (€m) (100%) 2H15 1H16 2H16 1H17 2H17 APRR dividend 245 287 6401 326 365 add APRR tax instalments to FE 176 183 159 217 222 add Other2 (0) 0 (128)3 (7) 74 less Eiffarie net interest (87) (86) (8

38. Slide 38: APRR free cash flow

    APRR free cash flow FE distributions, and therefore MQA distributions, do not reflect all 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 Eiffarie, w

39. Slide 39: MQA statutory accounts

    MQA statutory accounts Statutory accounts for the year ended 31 December 2017 Statutory accounting  MQA equity accounts all assets except Dulles Greenway, which is now controlled and consolidated following the acquisition of the remaining 50% estimated economic interest in May 2017 Equity accountin

40. Slide 40: Proportionately consolidated financial performance

    Proportionately consolidated financial performance Actual Pro forma Actual A$m year ended 31 Dec 17 year ended 31 Dec 161 Change vs pcp year ended 31 Dec 162 Proportionate revenue 878.2 845.7 3.9% 778.4 Proportionate operating expenses (225.4) (223.0) (1.1%) (209.2) Proportionate EBITDA from road as

Macquarie Atlas Roads — FY2017 Earnings Presentation on 6ix