MACQUARIE KOREA INFRASTRUCTURE FUND Full Year Results to 31 December January 2013

Transcription

1 MACQUARIE KOREA INFRASTRUCTURE FUND Full Year Results to 31 December January 2013

2 IMPORTANT NOTICE DISCLAIMER This presentation is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives, financial situation and particular needs of the investor. Before making an investment in Macquarie Korea Infrastructure Fund ( MKIF ), the investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary. MKIF and Macquarie Korea Asset Management Co., Ltd.( MKAM ) are not authorised deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia) and their obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of MKIF/ MKAM. Information, including forecast financial information, in this presentation should not be considered as a recommendation in relation to holding, purchasing or selling shares, securities or other instruments in MKIF. Due care and attention has been used in the preparation of forecast information. However, actual results may vary from forecasts and any variation may be materially positive or negative. Forecasts by their very nature, are subject to uncertainty and contingencies many of which are outside the control of MKIF. Past performance is not a reliable indication of future performance. This presentation is not an offer for sale of the securities of MKIF in the United States or in any jurisdiction where any offer, sale or solicitation in respect of such securities is not permitted. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended, or in any jurisdiction where such offer or sale is not permitted. MKIF does not intend to register any portion of any contemplated offering in the United States or to conduct a public offering of securities in the United States Not for distribution in the United States or in any jurisdiction where any offer, sale or solicitation in respect of the contemplated securities is not permitted. This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order ) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons ). Any securities will only be available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire any securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. FORWARD LOOKING STATEMENT This presentation contains forward-looking statements, in particular, under the heading Outlook. All forward-looking statements are our management s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. 2

3 CONTENTS 1 Key Results Highlights 5 Capital management transaction 9 Financial results 6 Busan New Port Phase Underlying asset performance 7 Debt profile 11 Newly opened assets 8 Outlook 12 2 Appendices Financial position statements 14 Profit and loss statements 15 Cashflow statements 16 Portfolio Long-term concession period 19 Operating performance by asset 20 Underlying asset performance 21 Distribution 22 3

4 Key Results 1

5 HIGHLIGHTS Solid financial and traffic results - Excluding one-offs, MKIF revenue and net income increased by 6.7% and 15.3%, respectively compared with the previous corresponding period ( pcp ) - Underlying traffic volume 1 and revenue 1 grew by 2.9% and 6.9%, respectively, on pcp - Weighted average daily traffic for the four newly opened assets 2 reached 78%³ of the Concession Agreement Forecasts Delivered a value-creative transaction - Divested entire equity and subordinated debt interest in Daegu 4th Beltway East, realising one-off capital gain of KRW 34.3 billion 4 - The total net cash proceeds of KRW billion from the transaction used to repay MKIF s corporate level debt Outlook on Busan New Port, 2-3, remains cautiously optimistic - Successful vessel callings continuing from two Terminal Sharing Partners, CMA CGM and KMTC - Secured new customers including Maersk, Mediterranean Shipping Company and Orient Overseas Container Line - Volume migration from the Busan Old Port continues with BNP s market share of container volume in Busan area reaching 60% as of December 2012 Remains financially healthy with a conservative debt position - Proportional cash balance of KRW billion including MKIF cash of KRW 20.8 billion - Continued de-gearing of asset level debt with average maturity of 8.3 years, a decrease of 0.3 years on pcp - No external debt refinancing required until May Proportionately consolidated gearing of 40% 5, compared with 49% in pcp, with 69% 6 of interest obligations fixed Declared distribution of KRW 480 per share for the Period 1. On a weighted average basis based on revenue size of each asset and the MKIF s equity interest in each concession company. 2. Yongin-Seoul Expressway, Seoul-Chuncheon Expressway, Seoul Subway Line 9 and Incheon Grand Bridge 3. On a weighted average basis based on total commitment amount and average daily traffic 4. Including subordinated loan prepayment fee of KRW 0.64 billion. Before taking out of securities transfer tax of KRW 0.5 billion 5. Gearing = Proportionately consolidated MKIF Net Debt / (Proportionately consolidated MKIF Net Debt + MKIF market capital (3-month average)) 6. Hedging (Fixed) = Proportionately consolidated MKIF net debt adjusted for fixed debt / Proportionately consolidated MKIF net debt 5

6 FINANCIAL RESULTS Audited, non-consolidated financial information (Unit: KRW mn) % change Revenue 205, ,426 Interest income 171, , % Gain (loss) on sale of investment 33, Other income (loss) Expense 51,626 56, % Management fee 27,786 24,152 Interest expense 19,828 23,701 Other expense 4,012 8,989 Net income 154, ,584 EPS (KRW) Normalised Net income 4 120, ,962 Normalised EPS (KRW) % 1. One-off gain from the sale of equity in Daegu 4th Expressway East 2. One-off gain from 3rd tranche securitisation of interest receivables on the subordinated loan provided to Cheonan-Nonsan Expressway 3. Based on the number of shares outstanding of mil shares 4. Excludes one-off transaction related gains 6

7 UNDERLYING ASSET PERFORMANCE TRAFFIC VOLUME GROWTH 1 2.9% TRAFFIC REVENUE GROWTH 1 6.9% PORTFOLIO AGE years 2012 TRAFFIC PERFORMANCE (Growth rate) 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% NAHC BYTL KRRC KBICL WIC CNEC SICL MCB -5.0% YSE SCE SM9 IGB -10.0% Incheon International Airport Expressway NAHC Baekyang Tunnel BYTL Gwangju Second Beltway, Section 3-1 KRRC Gwangju Second Beltway, Section 1 KBICL Woomyunsan Tunnel WIC Cheonan-Nonsan Expressway CNEC Soojungsan Tunnel SICL Machang Bridge MCB Yongin-Seoul Expressway YSE Seoul-Chuncheon Expressway SCE Subway Line9 Section 1 SM9 Incheon Grand Bridge IGB Traffic revenue growth Traffic volume growth 1. On a weighted average basis based on revenue size of each asset and the MKIF s equity interest in each concession company 2. Operation period of each concession company on a weighted average basis based on respective commitment amount 3. Toll rate increases for KRRC, WIC and MCB resulted in decreased traffic volume and increased traffic revenue 7

8 NEWLY OPENED ASSETS 1 % OF PORTFOLIO 30% % OF CA FORECAST TRAFFIC VOLUME 2 78% TRAFFIC VOLUME GROWTH 3 5% 2012 TRAFFIC PERFORMANCE QUARTERLY TREND OF TRAFFIC VOLUME Asset Yongin-Seoul Expressway (YSE) Traffic volume Operation growth on commencement pcp Traffic revenue growth on pcp % of CA forecast traffic volume 01-Jul % 11.3% 75.7% Vehicles/day 80,000 70,000 60,000 50,000 Initial boarding/day 250, , ,000 Seoul-Chuncheon Expressway (SCE) Seoul Subway Line 9, Section 1 (SM9) Incheon Grand Bridge (IGB) 15-Jul % 7.5% 79.7% 24-Jul % 27.4% 103.8% 19-Oct % 6.1% 67.3% 40,000 30,000 20,000 10, Q Q1 Q2 Q3 Q Q1 Q2 Q3 Q Q1 Q2 Q3 Q4 YSE (LHS) SCE (LHS) IGB (LHS) SM9 (RHS) 100,000 50, Transportation assets opened since During 2012, on a weighted average basis based on total commitment amount and average daily traffic 3. Weighted average daily traffic during 2012 over

9 CAPITAL MANAGEMENT TRANSACTION DIVSTMENT OF DAEGU 4 TH BELTWAY EAST NET CASH PROCEEDS KRW 123.8bn ACCOUNTING INCOME 1 KRW 34.3bn IRR (PER ANNUM) 10.8% DESCRIPTION SALE OF EQUITY AND REDEPMTION OF SUBORDINATE DEBT Sale of MKIF s equity of KRW 57.6 billion with premium Repayment of MKIF s subordinated loan of KRW 32.7 billion 1 TRANSACTION RATIONALE ATTRACTIVE PRICING CAPITAL FLEXIBILITY Return positive transaction to MKIF s portfolio ~11% IRR since investment in 2006 The total net cash proceeds to be used primarily to repay MKIF s corporate level debt, To reduce interest expense To secure flexibility to recycle the capital into better performing assets ASSET DESCRIPTION Project name Relevant authority Daegu 4th Beltway East Concession term 24 years to 2026 MRG term Operation commencement September 2002 MKIF investment (Initial commitment in March 2006) Daegu Metropolitan City Government First 20 years of operation at 79.8% of CA forecasted revenue Total of KRW 89.6bn - 85% Equity (KRW 57.6 billion) - 85% Sub debt (KRW 32.1 billion) % of MKIF portfolio 5.1% (Before transaction) 1. Including subordinated loan prepayment fee of KRW million received in July

10 BUSAN NEW PORT PHASE 2-3 Construction completed on time and on budget, commencing operation in January 2012 Despite the slow ramp-up in the first half of 2012, BNP has secured annualised volume of 1.3 million TEUs for next twelve months The key highlights include: - In addition to the two long-term Terminal Sharing Agreement partners, CMA CGM and KMTC, BNP successfully completed vessel callings for new carriers including Maersk, Mediterranean Shipping Company (MSC) and Orient Overseas Container Line (OOCL) - Due to unexpected calling delay from some major vessels in the 4th quarter, total volume for 2012 was 0.5 million TEUs, shy of our previous forecast of 0.6 million TEUs - Volume migration from the Busan Old Port continues with BNP s market share of container volume in Busan area reaching 60% as of December Total volume is forecasted to reach 1.6 million TEUs in FY2013, reaching close to 90% of the current capacity of 1.8 million TEUs - Cash management continues to be a key management priority during the ramp-up phase Project Company Relevant Authority Concession Term BNCT Co., Ltd. Ministry of Land, Transport and Maritime Affairs 29 years 3 months from completion of construction (24 December March 2041) Construction Period 48 months (Dec 2007 ~ Dec 2011) Operation commencement 2 January 2012 MKIF Investment % of MKIF Portfolio 15.6% Total of KRW 259.4bn - 30% Equity ( KRW 66.4bn) - 100% Sub debt ( KRW 193bn) Gaduk-do, Busan City 10

11 DEBT PROFILE Conservatively positioned to withstand volatility in the credit market As of 31 December 2012 CASH 1 KRW 246.2bn (KRW bn) OUTSTANDING DEBT BALANCE 5 1,500 AMORTISING MATURITY years 1, GEARING 3 40% INTEREST RATE HEDGE 4 69% until end of Dec Proportionately consolidated cash balance (including MKIF cash balance of KRW 20.8bn) 2. Weighted average amortising maturity of the underlying asset level external debt 3. Gearing = Proportionately consolidated MKIF Net Debt / (Proportionately consolidated MKIF Net Debt + MKIF market capital (3-month average)) 4. Hedging (Fixed) = Proportionately consolidated MKIF net debt adjusted for fixed debt / Proportionately consolidated MKIF net debt 5. Outstanding debt balance based on amortisation schedule of asset level external debt on a proportionate equity shareholding basis. Excludes MKIF level corporate loan balance 11

12 OUTLOOK Structured to deliver underlying growth - Concessions designed to provide growth in revenues at least during the MRG period - Remains a young portfolio with a weighted average operational age of only 6.4 years - Scheduled amortisation of asset-level debt expected to accelerate MKIF distribution growth in the medium-term Active capital management expected to continue during the year - Review of additional investment opportunities in the newly opened assets, particularly in Yongin-Seoul Expressway Focus on successful ramp-up of BNP - Secured annualised volume of 1.3 million TEUs for the next 12 months - Total volume is forecasted to reach 1.6 million TEUs in FY2013, which is close to the current maximum volume capacity of 1.8 million TEUs - As it is typical for a port terminal, management expects a slow-ramp up thus maintaining short-term operational and financial stability remains a management priority for the year 12

13 Appendices 2

14 FINANCIAL POSITION STATEMENTS Non-consolidated as at 31 December 2012 and 31 December 2011 (Unit: KRW mn) Assets Invested Assets 1,691,108 1,869,892 Cash & deposits 20, ,893 Loans 1,096,042 1,137,196 Equity securities 574, ,803 Others 364, ,628 Interest receivable 351, ,421 Other receivables 4,458 4,458 Deferred costs, net 8,071 9,749 Total Assets 2,055,283 2,126,520 Liabilities Accounts Payable 1 1 Management fee payable 7,455 6,140 Long-term debt 84, ,907 Bonds 249, ,978 Other liabilities 1,534 1,812 Total Liabilities 343, ,838 Shareholders Equity Share Capital 1,670,986 1,670,986 Retained Earnings 41,207 14,696 Total Shareholders Equity 1,712,193 1,685,682 Total Liabilities and Shareholders Equity 2,055,283 2,126,520 CAPITAL INJECTION INTO MKIF INVESTMENTS Asset Item 2012 Gwangju 2nd Beltway, 3-1 Senior Debt (6,587) Soojungsan Tunnel Senior Debt (7,195) Busan New Port 2-3 Sub Debt 4,720 Daegu 4th Beltway East Sub Debt (32,045) Daegu 4th Beltway East Equity (57,552) Total (98,659) * Excludes Baekyang Tunnel loan amortisation of KRW 47mil 14

15 PROFIT AND LOSS STATEMENTS Non-consolidated 12 months to 31 December 2012 (Compared to 2011) 1. One-off gain from the sale of equity in Daegu 4th Expressway East 2. One-off gain from 3rd tranche securitisation of interest receivables on the subordinated loan provided to Cheonan-Nonsan Expressway (Unit: KRW mn) Revenue 205, ,426 Interest Income 171, ,804 Gain (Loss) on sale of investment 33, Other income Expenses 51,626 56,842 Management fees 27,786 24,152 Custodian fees Administrator fees Interest expenses 19,828 23,701 Other expenses 3,464 8,447 Net Profits 154, ,584 15

16 CASHFLOW STATEMENTS Non-consolidated - 12 Months to 31 December 2012 and 31 December 2011 (Unit: KRW mn) Cashflows from operating activities: Cash inflows from operating activities 200, ,130 Sale of investment 91,159 20,550 Collection of other loans receivable 45,827 14,530 Interest and other income 63,419 98,050 Cash outflows from operating activities: (33,869) (100,096) Investments (4,720) (74,355) Fees and expenses (29,148) (25,741) Net cash provided by (used in) operating activities 166,537 33,034 Cashflows from financing activities: Repayment of long-term debt (180,000) (250,000) Drawdown from long-term debt 74,500 55,443 Proceeds from Bond - 250,000 Distributions paid (127,612) (115,679) Interest expense (13,403) (6,552) Borrowing related costs (100) (3,592) Bond issue cost - (1,126) Net cash provided by (used in) financing activities (246,615) (71,506) Net increase (decrease) in cash and deposits (80,078) (38,472) Cash and deposits at beginning of the period 100, ,365 Cash and deposits at end of the period 20, ,893 16

17 PORTFOLIO 1 As of 31 December 2012 Portfolio Composition by Asset Portfolio Composition by Phase and Type Beakyang Tunnel 0.2% Seoul Subway Line 9, Section 1 Incheon Grand Bridge 9.8% 4.5% Busan New Port Phase % Subway 4.5% Port 15.6% Gwangju 2 nd Beltway, Section % Incheon International Airport Expressway 6.6% Soojungsan Tunnel 6.6% Senior debt 14.3% Mature 11.6% Ramp up 52.9% Equity 34.2% Seoul- Chuncheon Expressway 8.2% Yongin-Seoul Expressway 8.1% Machang Bridge 6.8% Toll-road 79.9% 4.9% Gwangju 2 nd Beltway, Section % Cheonan-Nonsan Expressway 16.1% Woomyunsan Tunnel Growth 35.5% Sub debt 51.5% 1. Based on commitment amount, excluding subordinated debt of Daegu 4th Beltway East repaid in July

18 PORTFOLIO 1 As of 31 December 2012 MKIF COMMITMENT AND DEBT INTEREST RATE (KRW bn, %) Name Abbrv Equity Ownership(%) Subordinated debt Interest rate(%) Senior debt Interest rate (%) Total Baekyang Tunnel BYTL Gwangju Second Beltway, Section 1 KBICL Incheon International Airport Expressway NAHC Soojungsan Tunnel SICL Cheonan-Nonsan Expressway CNEC Woomyunsan Tunnel WIC Gwangju Second Beltway, Section 3-1 KRRC Machang Bridge MCB Yongin-Seoul Expressway YSE Seoul-Chuncheon Expressway SCE Seoul Subway Line 9 Section 1 SUB Incheon Grand Bridge IGB Busan New Port Phase 2-3 BNP Total ,665.0 Percentage(%) 34.2% 51.5% 14.3% 100% 1. Excludes subordinated debt of Daegu 4th Beltway East repaid in July Includes KRW 3.2bn working capital facility 18

19 LONG-TERM CONCESSION PERIOD CONCESSION TERM VS. GOVERNMENT REVENUE SUPPORT PERIOD As of 31 December 2012 Relevant Authority (C) Central government (L) Local government Revenue Support 1,2 Concession Term 3 Weighted Average Revenue Weighted Average Present Early Termination Support Concession Term Support 11 years 23 years 1,4 (L)Baekyang Tunnel (L)Kwangju 2nd Beltway, Section 1 (C)Incheon International Airport Expressway (L)Soojungsan Tunnel (C)Cheonan Nonsan Expressway (L)Woomyunsan Tunnel (L)Kwangju 2nd Beltway, Section 3 (L)Machang Bridge (C)Yongin-Seoul Expressway (C)Seoul Chuncheon Expressway (L)Seoul Subway Line 9, Section 1 (C)Incheon Grand Bridge (C)Busan New Port Phase Revenue support and termination payment provisions vary for each concession 2. Revenue support until at least 2019 with weighted average support remaining of about 11 years (excluding Busan New Port Phase 2-3) 3. Concessions last at least until 2030 with weighted average life remaining of over 23 years 4. Concession companies have the right to receive payments if the relevant concession agreement is terminated prior to expiration of the concession term, including termination due to events attributable to the concession company or the government body or for events of force majeure 19

20 OPERATING PERFORMANCE BY ASSET 1 12 Months to 31 December 2012 Assets Operating Revenue 2 OPEX EBITDA Net Debt 3 EBITDA margin Net Debt to EBITDA Operating Revenue 2 OPEX EBITDA Net Debt 3 EBITDA margin (Unit: KRW million) Net Debt to EBITDA Gwangju Second Beltway, Section ,552 (4,862) 9,690 (1,606) 67% (0.2x) 30,553 (4,431) 26,122 (1,584) 85% (0.1x) Gwangju Second Beltway, Section ,331 (3,965) 14,367 (1,775) 78% (0.1x) 17,131 (5,798) 11,333 (2,279) 66% (0.2x) Soojungsan Tunnel 4 11,417 (3,909) 7,509 (13,362) 66% (1.8x) 23,966 (3,740) 20,226 (16,219) 84% (0.8x) Baekyang Tunnel 4 21,396 (4,229) 17, ,005 80% 7.9x 23,259 (3,722) 19, ,812 84% 7.3x Incheon International Airport Expressway 199,138 (21,008) 178, ,424 89% 0.9x 187,868 (19,060) 168, ,679 90% 1.4x Cheonan-Nonsan Expressway 186,395 (25,721) 160,675 96,612 86% 0.6x 180,093 (23,936) 156, ,402 87% 1.2x Woomyunsan Tunnel 4 19,869 (3,966) 15,903 76,640 80% 4.8x 21,015 (3,787) 17,228 86,162 82% 5.0x Machang Bridge 23,144 (5,047) 18, ,747 78% 12.5x 23,178 (4,495) 18, ,412 81% 11.9x Yongin-Seoul Expressway 41,502 (10,393) 31, ,281 75% 11.5x 37,161 (9,673) 27, ,953 74% 12.8x Seoul-Chuncheon Expressway 106,717 (20,607) 86, ,605 81% 11.8x 106,608 (30,402) 76, ,035 71% 10.9x Seoul Subway Line 9 Section 1 121,339 (81,337) 40, ,127 33% 9.4x 93,308 (76,538) 16, ,397 18% 26.4x Incheon Grand Bridge 68,711 (15,802) 52, ,818 77% 10.9x 59,743 (16,265) 43, ,276 73% 13.4x Busan New Port Phase ,429 (41,024) (17,596) (475,628) (75%) (27.0x) N/A N/A N/A N/A N/A N/A Proportionate average 6 332,729 (74,563) 258, ,646 78% 3.9x 344,102 (73,073) 271,030 1,073,609 79% 4.0x 1. Management estimated, unaudited figures. Actual results may vary 2. Revenue compensation and other compensations from the relevant government authority are reflected on cash basis 3. Excludes Shareholders loans 4. All or part of MRG portion of operating revenue receivable for 2011 were not paid, resulting in significantly decreased operating revenue compared to prior year 5. Busan New Port Phase 2-3 commenced operation 2 January Negative Net Debt to EBITDA margin reflects cash deficiency due to ramp-up period 6. On a proportionate average basis based on MKIF s equity interest in each concession company. Daegu 4th Beltway East (divested in June 2012) and Busan New Port Phase 2-3 (operation commenced in January 2012) excluded from the proportionate average for FY 2011 and FY

21 UNDERLYING ASSET PERFORMANCE TRAFFIC PERFORMANCE OVER 2012 AND 4Q 2012 FY2012 4Q 2012 Average daily traffic volume Average daily traffic revenue Average daily traffic volume Average daily traffic revenue Vehicles/day % change on YTD KRW thousand/day % change on YTD Vehicles/day % change on pcp KRW thousand/day % change on pcp Incheon International Airport Expressway 52, % 338, % 52, % 331, % Baekyang Tunnel 70,819 (0.3%) 50,825 (1.4%) 71,741 (0.7%) 51,405 (1.6%) Gwangju Second Beltway, Section ,770 (3.9%) 34, % 34,074 (10.0%) 36, % Gwangju Second Beltway, Section 1 37, % 39, % 38, % 40, % Woomyunsan Tunnel 25,105 (7.2%) 54, % 25,103 (10.8%) 54, % Cheonan-Nonsan Expressway 43, % 345, % 43, % 345, % Soojungsan Tunnel 42,497 (0.8%) 31,105 (3.0%) 43,430 (1.2%) 31,695 (3.0%) Machang Bridge 15,485 (1.5%) 30, % 14,853 (11.0%) 32, % Yongin-Seoul Expressway 66, % 113, % 68, % 122, % Seoul-Chuncheon Expressway 39, % 239, % 37,513 (2.5%) 229, % Seoul Subway Line 9 Section1 222, % 175, % 233, % 187, % Incheon Grand Bridge 28, % 144, % 28, % 142, % Weighted average growth rate 1 2.9% 6.9% 0.3% 4.6% 1. On a weighted average basis based on revenue size of each asset and the MKIF s equity interest in each concession company. 21

22 DISTRIBUTION DECLARATION/ PAYMENT Semi-annual: As end of June and December DISTRIBUTION FLOOR Higher of taxable income or 100% of distributable accounting income to maintain tax exempt status 2012 DISTRIBUTION KRW 480 per share 1 CASH YIELD Circa 7.0% 2 DISTRIBUTION HISTORY ( PER SHARE, POST-LISTING ) Second Half First Half Stock distribution Composed of (i) a dividend of KRW465 per share and (ii) a distribution in excess of profits of KRW15 per share (Deduction from the retained earnings). Total of KRW480 per share will be accounted as distribution income in calculating dividend income tax and tax payable under Korean law. Investors are advised to consult their own tax advisor for the appropriate tax treatment of the distribution 2. Based on the share price as of 31 December 2012 and 2012 distribution 22