407 ETR Presentation

Intoll Group
Intoll Management Limited
AFS licence no: 241405
ABN: 67072609271
Level 9,
130 Pitt St,
Sydney NSW 2000
Australia
t. (61) 2 8257 7777
f. (61) 2 8257 7711
www.intoll.com
15 June 2010
ASX RELEASE
407 ETR Presentation
Intoll owns and manages a 30% interest in 407 ETR, a 108km multi lane highway with electronic tolling in
Toronto Canada which has been open since 1997. Intoll made its initial investment in 407 ETR in 2002 and
88 years remain of the concession.
During the period of June 15 -18, the Chief Executive Officer of the 407 ETR, Jose Tamariz, will be in Australia
and meeting with institutional investors and broking analysts to discuss the performance of the 407 ETR as
outlined in the presentation attached.
Since 2001 the 407 ETR has delivered compound annual growth (CAGR) in traffic of 4.2% (as measured by
Vehicles Kilometers Travelled), revenue growth of 13%, 15% EBITDA growth and 22% growth in distributions.
The attached presentation highlights:
• the strong value proposition of the 407 ETR, as demonstrated by the ongoing evidence of low levels
of traffic elasticity
• real toll growth of 53% since 2004
• that forecast regional demographic information underpins the 407 ETR long term growth prospects.
As at 31 December Intoll’s investment in 407 ETR comprised 90% of its portfolio by value.
For further information please contact:
Luke Oxenham
Jane Rotsey
Chief Financial Officer
t. (61) 2 8257 7704
m. (61) 413 871 056
e. [email protected]
Head of Corporate Affairs
t. (61) 2 8257 7728
m. (61) 401 997 160
e. [email protected]
1
Investors presentation
Sydney, June 2010
Section One: Background
2
Highway 407 – Current
5+5
Lanes
3 + 3 Lanes
4 + 4 Lanes
2 + 2 Lanes
4 + 4 Lanes
2 + 2 Lanes
3 + 3 Lanes
108 kilometres (67 miles)
198 entry/exit points
99-year concession (88 years
remaining)
Open-access, All Electronic Tolling
Tolling flexibility
41 Interchanges / 7 major Highway to
Highway
All Electronic Roadside Tolling System
Sophisticated electronic toll highway
-
NO toll-booths, “closed ticket” tolling
scheme (on/off ramps)
-
NO stopping or slow-downs to pay
-
ALL vehicles able to use highway
-
Transponder not required. If a valid
transponder is not detected, digital
images are taken at entry and exit and
invoices posted to the registered car
owner.
-
Tolls billed monthly
4
407 INTERNATIONAL INC.
30%
www.intoll.com
A listed toll road
investment company
53.23%
16.77%
www.snclavalin.com
World´s leading engineering and
construction group
www.cintra.es
Leader private
developers of
transport
infrastructure in the
world
5
Section Two: Historical Performance
6
Trip & VKT Growth vs. Ontario GDP Growth
2003
2004
2005
2006
2007
2008
2009
Avg
Ontario GDP Growth
1.4%
2.5%
2.7%
2.6%
2.3%
-0.5%
-3.1%
1.1%
407 ETR Trip Growth
3.1%
1.7%
3.6%
1.1%
4.1%
1.4%
3.0%
0.4%
5.4%
3.1%
1.2%
1.7%
-2.6%
0.5%
2.5%
1.4%
3.3%
5.0%
5.3%
2.9%
6.1%
0.0%
-1.7%
3.0%
1.9%
2.5%
2.6%
0.3%
3.8%
0.5%
1.4%
1.9%
Trip growth over GDP growth
407 ETR VKT Growth
VKT growth over GDP growth
7
Toll History
Feb 2007: Zone Tolling
Feb 2009: Trip Toll Charge
8
2009 and 2010 Toll Structures
Tolling regime allows revenue growth in difficult economic environments
2010 Toll Structure
Regular Zone
Light Zone
Segments
W1 – C2 , C4, E1 – E2
C3, C5 – C7
Per KM Toll Charge
Pk: $0.2135,
OffPk: $0.1835
Pk: $0.2010,
OffPk: $0.1835
Trip Toll Charge
Light: 40¢
HSU:50¢
HMU:75¢
Weighted Average Toll Rate: $ 0.1968 (4.2% Growth)
7.7 % Growth in Typical Trip Toll (with TTC)
2009 Toll Structure
Regular Zone
Light Zone
Segments
W1 – C4
C5 – E2
Per KM Toll Charge
Pk: $0.1985,
OffPk: $0.1800
Pk: $0.1925,
OffPk: $0.1800
Trip Toll Charge
Light: 25¢
HSU:50¢
HMU:75¢
Weighted Average Toll Rate: $ 0.1889 (1.4% Growth)
8.1 % Growth in Typical Trip Toll (with TTC)
9
Key Financial Indicators
CAD$
+2.5%
-12.2%
CAD$
+7.1%
+5.4%
-9.8%
10
Distributions to Shareholders
85
Principle is maximize distributions to shareholders
Release of escrowed fund following Settlement
Agreement with the Province
11
Section Three: Q1-2010
12
Q1-2010 Traffic Results
High traffic performance in Q1 due to improvement in the economy
January
February
March
Total
Trips
Trips
Trips
Trips
2010
2009
(%)
8.5
8.4
0.2%
166.1
160.4
3.5%
7.9
7.9
-0.1%
152.9
150.9
1.3%
9.3
8.7
6.1%
180.8
167.3
8.1%
25.6
25.1
2.2%
499.8
478.7
4.4%
VKT
VKT
VKT
VKT
13
Q1-2010 Traffic Results
Transponders in Circulation (2)
Average Transponder Penetration (1)
83.0%
82.0%
81.0%
80.0%
79.0%
78.0%
77.0%
76.0%
75.0%
74.0%
73.0%
1,000,000
800,000
600,000
400,000
200,000
Q1
2006
Q1
2007
Q1
2008
Q1
2009
1) % of transponder trips to total trips
Q1
2010
0
Q1 2006
Q1 2007
Q1 2008
Q1 2009
Q1 2010
2) All transponders registered as at 31st March, 2010
14
Q1-2010 Financial Highlights
119.7 CAD$
26.4 CAD$
131.2 CAD$
28.1 CAD$
15
Q1-2010 Financial Highlights
16
Bond Portfolio
Company priced CAD$800 million senior bonds on June 11, 2010 to
refinance senior bond, Series 07-A2 maturing October 2010
17
Section Four: Operational + Capex Improvements
18
407 ETR’s Historical Traffic Performance
CAGR 3.2%
(2001-2009)
CAGR 0.94%
(2001-2009)
CAGR 3.22%
(2001-2009)
CAGR 4.19%
(2001-2009)
19
Unbilled Traffic/Half Trips
Management work actively on strategies to reduce unbilled traffic
Vehicle Fingerprinting Technology
Enhanced matching algorithm
Reduce unreadable trips through improved VEP
-13.7%
-20.0%
20
Transponder Usage
+7.1%
Promotions have
increased the transponder
penetration thereby reducing
corporate cost of pursuing
payments for road usage.
+0.3%
21
Lanes Highway 407 – Current vs. Original
4 + 4 Lanes
2 + 2 Lanes
2 + 2 Lanes
3 + 3 Lanes
3 + 3 Lanes
3 + 3 Lanes
4 + 4 Lanes
3 + 3 Lanes
3 + 3 Lanes
Section
3 + 3 Lanes
0+ 0 Lanes
Opening Date
W1, W2, W3 , E1(from Markham) & E2 July & September, 2001
Mainline
C2 : Hwy 401 to Hwy 10 (Hurontario)
(both EB and WB)
Mainline
0+ 0 Lanes
- Since opening 342 km of new
lanes have been delivered
improving traffic flow.
0+ 0 Lanes
Mainline
Interchange Markham Bypass Interchange (partial)
3 + 3 Lanes
2 + 2 Lanes
4 + 4 Lanes
Mainline/
Ramp
2 + 2 Lanes
5 + 5 Lanes
C4 C5 C6 : Hwy 427 to Hwy 404
(both EB and WB)
August 30, 2004
Widening
209.61 km
25.97 km
November 26, 2004
September 24, 2006
49.05 km
Mainline
E1A : McCowan Rd to Markham Rd
(both EB and WB)
November 22, 2006
4.21 km
Mainline
C3 : Hwy 410 to Hwy 427
(both EB and WB)
August 3, 2007
22.99 km
Mainline
C2 EB : Hwy 401 to Hwy 410
C2 WB: Hwy 401 to Hwy 410
September 6, 2007
September 17, 2007
25.98 km
Mainline
E1: Markham Rd. to YD Line
(both EB and WB)
September 9, 2009
4.14 km
Ramp
9th Line (Ramp 1A)
September 9, 2009
Lanes Highway 407 – Current vs. Ultimate
5 + 5 Lanes
3 + 3 Lanes
6 + 6 Lanes
5 + 5 Lanes
4 + 4 Lanes
5 + 5 Lanes
4 + 4 Lanes
2 + 2 Lanes
5 + 5 Lanes
4 + 4 Lanes
3 + 3 Lanes
4 + 4 Lanes
Current Main Lane Km: 727
Ultimate Main Lane Km: 1,010
2 + 2 Lanes
5 + 5 Lanes
Impact of New Lanes
2005
2009
2005
2009
- Improved traffic flow underpins 407ETR competitive advantage.
24
2010 Planned Construction
407 ETR plans to invest over $70 million in 2010
W1
Lengthening Hwy 403 W / QEW S ramp merge lane and
MTO’s reconstruction of specific ramps in QEW / Fairview
St. interchange.
Works commenced in Q4-2009 and are expected to be
completed in the latter half of 2010.
C1
Widening over Hwy 401 bridge structures related to inside
widening of Hwy 407 between Hwy 403 and Hwy 401.
Widening of Hwy 407 bridge structures over the Sixteen
Mile Creek and CPR.
C7
Inside widening of Highway 407 between Hwy 404 and
Markham Road.
Additional lanes (18.6 km) expected to be opened in
September 2010.
25
Section Five: Tolling
26
Description of Tolling Mechanism - Schedule 22
Flexible Tolling Regime subject to provide congestion relief
Congestion Payments to the
Government - twice the excess of
real toll revenue over the Toll
Threshold if tolls were raised
beyond Toll Threshold and traffic
level fell below Traffic Threshold.
Margin over Traffic Threshold in all
segments has improved in YTD 2010
Traffic Level
Schedule 22 provides the framework to increase the toll rates and other charges and includes the
concept of the Congestion payment to ensure that traffic relief in the corridor is being provided.
Provides flexibility to charge different tolls for each segment of the 407ETR, by direction and by
hour .
Sets a minimum level of traffic (Traffic Threshold TT) in the peak hours for each segment/dir
based on 2002 (Base year) measured traffic levels and a minimum Toll Threshold in 1999, which
increases 1.5% in 2000 and 2% beyond, up to 30% accumulated (plus inflation)
407ETR is free to raise tolls after the Base year, conditional upon maintaining traffic levels above
Traffic Threshold on a segment basis.
The Traffic Threshold grows by 1%-3% per year after the Base year, up to a maximum of 1,500
vehicles per hour per lane.
Toll Threshold
Traffic
Threshold
Congestion Payment
Toll Rate
27
Tolling Increases vs. CPI
407 ETR has delivered real toll growth of 53% since 2004
28
Toll Rate Comparison
407 ETR per kilometre rate compares favourably with other international
toll road rates.
2010 Toll Rate
Facility
CAD$/KM/Peak
Eastern Distributor (Australia)
¢ 73.61
91 Express Lanes (California)
¢ 53.20
Westlink M7 (Australia)
¢ 29.90
AUSOL 1 (Spain)
¢ 29.26
Chicago Skyway (Illinois)
¢ 25.10
Delaware Turnpike (Delaware)
¢ 23.73
407ETR
ETR(Ontario)
(Ontario)
407
23.35
¢ 23.63
San Joaquin Hills Transportation Corridor (CA)
¢ 20.67
Dulles Greenway (Virginia)
¢ 19.35
AUTEMA (Spain)
¢ 17.73
Foothill Transportation Corridor – North Segment (CA)
Richmond Downtown Expressway (Virginia)
¢ 16.32
¢ 13.44
1 USD = 1.05043 CAD
1 EUR = 1.29380 CAD
1 AUD = 0.883325 CAD
29
Section Six: Drivers of Future Growth
30
Future Socioeconomic Growth
York
23%
Halton
25%
Hamilton
9%
Peel
13%
Toronto
6%
Durham
23%
GTA population and
employment growth rates in
the 407ETR corridor compare
favourably with Canadian
growth rates.
Greater Toronto Area Population Growth (2011 – 2021)
Source: Government of Ontario Places to Grow
York
19%
Halton
21%
Hamilton
17%
Peel
12%
Toronto
4%
Durham
19%
Greater Toronto Area Employment Growth (2011 – 2021)
Source: Government of Ontario Places to Grow
31
Employment along the Corridor
Oshawa
TORONTO
Oakville
Burlington
Hamilton
- 407ETR services an area of where big
industry is well established.
Regional Network
Highway 407 has benefited from severe congestion on alternate routes
and is expected to continue to benefit in the future as regional traffic
grows.
407ETR offers speeds over 100Kph whereas alternative freeways average
45-50Kph (peak hours). A driver trying to bypass Toronto could save
more than 1hour using the tolled alternative.
Quebec
Highway 7: An arterial road 1km north
of Highway 407. Acts as a service
road to Highway 407. It runs through
neighbourhoods and commercial
areas and includes signalized
intersections that result in very low
average speeds.
Highway 401: “The busiest Highway in North America”
Main trade route between Michigan, Ontario and Quebec
also ranks as the busiest truck route in the world.
10km south of the Highway, competes with the central
and eastern sections for medium to long distance trips.
Carries between 4-8 lanes of traffic per direction and is
severely congested during most times of the day. Traffic
levels over 420.000 v/d.
403-QEW: Competes with the western
section of Highway 407 and currently
carries 3-4 traffic lanes per direction
with grade separated intersections.
At capacity during peak periods.
Traffic over 160.000 v/d.
Michigan
33
East Completion
When the East Completion is constructed it is expected to deliver
additional traffic to 407ETR.
407 ETR
RFQ: June 2010
RFP: November 2010 (expected)
34
Zoning of Residential and Commercial Development
407 ETR
35
QUESTIONS?
36