Macquarie Korea Infrastructure Fund (MKIF) 17 th Annual General Shareholders Meeting

Transcription

1 Macquarie Infrastructure and Real Assets Macquarie Korea Infrastructure Fund (MKIF) 17 th Annual General Shareholders Meeting 25 March 2016

2 MEETING STRUCTURE 1 OPENING OF THE MEETING 2 FORMAL PROCEEDINGS 3 BUSINESS REPORT 4 CLOSURE OF THE MEETING 5 QUESTIONS AND ANSWERS

3 Chairman : Chul Hum Paik Representative Director of Macquarie Korea Asset Management Co., Ltd. Speaker : Jason Pak Chief Operating Officer (COO) of Macquarie Korea Asset Management Co., Ltd.

4 MKIF SUPERVISORY DIRECTORS Kyung Soon Song Founding Representative Expert of Korea Expert Consulting Group (KECG) Former Staff of Ministry of Strategy and Finance Former Senior Staff of World Bank Steering Committee Member (Chairman of Investment Subcommittee), Korea Investment Corporation Dae Hee Yoon Attorney-at-law, Senior Advisor of Yulchon Former Senior Secretary of Economic Affairs at the Presidential Office The 12th Minister of the Government Policy Coordination Office Chair Professor at Gachon University Dae Yun Cho (Director term expires in March 2016) PAGE 5

5 1 OPENING OF THE MEETING

6 MKIF SNAPSHOT Investment 1 KRW1.6tr 11 toll roads / 1 container terminal Market cap 2 KRW2.7tr Korea Exchange Top 85 based on market cap 14,500 13,000 11,500 10,000 8,500 MKIF 주가 price MKIF 수정 price 주가 (distribution ( 배당미지급 adjusted) 가정 ) Total value delivered to shareholders 3 KRW1.9tr 7,000 5,500 4,000 2, As at 15 March On a commitment basis 2. As at 15 March Reflects improvement in market capitalisation from 15 March 2006 to 15 March 2016 and distributions paid to date 4. As at 31 December # of shareholders 4 +16,000 PAGE 7

7 REPORT OF ATTENDING SHAREHOLDERS AND NUMBER OF SHARES/ DECLARED GENERAL MEETING Attending shareholders: Total number of voting shares issued: 331,459,341 shares 187,664,997 shares 56.62% of the total number of voting shares PAGE 8

8 2 FORMAL PROCEEDINGS

9 2a RESOLUTION Appointment of Mr. Woo Young Jung as MKIF s Supervisory Director

10 ROLES OF SUPERVISORY DIRECTORS Monitor the corporate director s fund management activities to protect interests of investors MKIF is required to appoint at least two supervisory directors under the Financial Investment Services and Capital Markets Act and MKIF Articles of Incorporation BOARD APPROVAL REQUIRED (FINANCIAL REPORTING) 1. MKIF s annual financial statements 2. Distribution payment 3. Issuance of new shares 4. Approval on borrowings 5. Appointment of an external auditor 6. Payment of expenses or fees payable to service providers (asset manager, custodian and administrator, etc.) 7. Operating expenses over KRW 50mn (including Investment due diligence budget) NOTIFICATION TO BOARD (FUND ASSETS) 1. MKIF s asset acquisition and divestment 2. Refinancing of MKIF invested assets 3. MKIF s asset valuation (OTHERS) 4. Investment due diligence budget less than KRW 50mn 5. Related party transactions for non-controlled asset 6. MKIF assets litigation status 7. Major event affecting MKIF s investment return 8. MKIF s half-yearly financial statements (KEY CONTRACTS) 8. Execution and/or termination of the Management Agreement, Custodian Agreement, Administration Agreement 9. Related party transaction (CORPORATE GOVERNANCE ) 10. Amendment of MKIF Articles of Incorporation 11. MKIF s key policies and any significant changes PAGE 11

11 RESOLUTION: APPOINTMENT OF MR. WOO YOUNG JUNG AS MKIF S SUPERVISORY DIRECTOR CAREER CURRENT Managing partner, Lee & Ko Adjunct Professor, Korea University School of Law Arbitrator, Korean Commercial Arbitration Board Committee Member, Policy Advisory Committee, Ministry of Oceans and Fisheries Legal Advisor, Industrial Bank of Korea Legal Advisor, Bank of Korea EDUCATION College of Law, Seoul National University (LL.B) Graduate School of Law, Seoul National University (LL.M) Admitted to the bar, Korea (1989) FORMERLY Committee Member, Fund Management Committee, National Credit Union Federation of Korea Committee Member, Committee for Management of Postal Insurance Reserve, Korea Post Advisor, Korea Financial Intelligence Unit PAGE 12

12 3 BUSINESS REPORT

13 HIGHLIGHTS FY15 performance Growth in revenue and net income by 21% and 22%, respectively Underlying assets achieved solid operational performance Achieved favorable litigation outcomes Delivered three value-accretive capital restructuring transactions 1 Paid a FY15 distribution of KRW 464 per share 11% growth compared to FY14 1. Incheon International Airport Expressway, Yongin-Seoul Expressway and Woomyunsan Tunnel Expressway (WIC). WIC transaction closed in January 2016 PAGE 14

14 FINANCIAL PERFORMANCE Delivered strong financial performance a large revenue increase mainly due to the dividend income paid by two assets Net Income Distribution Revenue Expense KRW 153.8bn Up by 22% KRW 219.5bn KRW 65.7bn KRW 153.8bn Up by 11% Distribution per share KRW 464 Annualised yield 1 5.7% Financial summary Dividend income paid by Incheon International Airport Expressway of KRW 28.9bn and Soojungsan Tunnel of KRW12.0bn 2Q performance fee of KRW 7.8bn paid to the manager Interest expense on MKIF s borrowings of KRW 19.4bn, representing an average interest rate of 4.36% per annum, approximately 39bps lower than FY14 Distribution Total distribution paid for FY15 does not include return of capital FY15 total shareholder return recorded 23% 2 1. Based on FY15 closing price (KRW 8,030) and the distribution declared for 2015 (KRW 464 per share) 2. Change in share price plus dividend yield PAGE 15

15 MKIF DEBT PROFILE Focus on maintaining a stable and efficient capital structure while prudently reviewing potential refinancing upsides through changing market environment Under the PPP Act 1, MKIF can borrow up to 30 percent of its paid-in-capital 2 (KRW bn) As of Dec 2015, MKIF s total borrowing was KRW bn decreased by KRW 99.2 bn compared to pcp 5yr-corporate bond of KRW 60bn will mature on 31 May 2016 MKIF s Borrowings (as of 31 Dec 2015) Interest rate trend Item 5yr - Corporate Bond 7yr - Corporate Bond Credit loan facility Total borrowing Issuance/ Drawdown Interest rate KRW 60bn 4.57% KRW 190bn 4.97% KRW 109.4bn KRW 359.4bn CD+ 180bps (%) Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 10yr Govt bond 3yr Corporate bond (AA-) 91d-CD BOK base rate 1. Act on Public-Private Partnerships in Infrastructure 2. Paid-in-capital of KRW 1.67 trillion PAGE 16

16 OPERATIONAL RESULTS TOLL ROADS All 11 toll-road assets traffic and toll revenue increased compared to FY14; four assets 1 achieved higher traffic volume than MRG level Average daily traffic volume 2 8.8% 554,810 vehicle/day Average daily traffic revenue 2 8.5% KRW 1,744 mn/day Newly opened assets % % of CA forecast traffic volume 1. Four assets include Machang Bridge, Yongin-Seoul Expressway, Seoul-Chuncheon Expressway and Baekyang Tunnel 2. On a weighted average basis based on revenue size of each asset and the MKIF s equity interest in each concession company 3. Yongin-Seoul Expressway, Seoul-Chuncheon Expressway and Incheon Grand Bridge PAGE 17

17 OPERATIONAL RESULTS BUSAN NEW PORT PHASE 2-3 Revenue, EBITDA and EBITDA margin improved in FY15 primarily driven by an increase in tariff rates and through cost savings from improved operational efficiency Revenue/ EBITDA KRW72.1/25.5bn 5% / 15% growth on pcp EBITDA margin 35.6% Up by 3.0%p on pcp Throughput volume (TEU) 1.37milTEU 3% decrease on pcp (KRW mil) 140, , ,000 80,000 60,000 40,000 20, Historical results and FY16 targets (E) Revenue (LHS) EBITDA (LHS) Volume Throughput (RHS) volume (RHS) 1.80 ( mil TEU) Source: BNP. Actual performance may vary from the forecast provided by BNP PAGE 18

18 OUTLOOK BUSAN NEW PORT PHASE 2-3 Continued growth of handling volume expected in New Port while limited capacity and room for further expansion remain other than in BNP until new phase opening in 2019/2020 BNP FY16 target 1 Throughput volume (TEU) Revenue/ EBITDA EBITDA margin 1.8mil TEU KRW101.9/45.1bn ~49% BNP status As of January 2016, a 12-month estimated forward service schedule was over 1.6 million TEU Volume upsides expected as CMA CGM s acquisition of APL finalises and additional volume from the China Shipping and COSCO merger begins to call at BNP Busan Port performance highlights Container Terminals ( CTs ) in Operation New Port 1. Source: BNP. Actual performance may vary from the forecast provided by BNP 1. Source: BNP 2. Source: BNP s volume includes shifting; New Port s and North Port s volumes are compiled by Busan Port Authority and do not include shifting 3. Source: Busan Port Authority shifting volume excluded; volume of misc. terminals included for market share calculation North Port 5 Terminals 4 Terminals Handling Capacity of CTs 2 (TEU p.a.) 14.4mil 7.7mil Actual volume in FY mil 6.0mil Volume Growth over pcp Busan Port Market Share 4 7.5% -2.1% 66.2% 33.8% PAGE 19

19 LEGAL DISPUTES Three local concession assets of MKIF are undergoing legal disputes with their respective government authorities Machang Bridge: The International Chamber of Commerce (ICC) arbitration process was closed on 2 Apr 2015 all of overdue MRG was paid (February 2015) Gwangju 2 nd beltway Section 1: Seoul Administrative Court confirmed Gwangju City s order on MRG suspension was not legitimate and dismissed the case (August 2015) Cancellation of administrative order of capital reinstatement Claim of overdue payments Asset Status Government authority Asset Status Government authority Baekyang Tunnel ( BYTL )/ Soojungsan Tunnel ( SICL ) - Busan District Court ruled in favour of BYTL an SICL (October 2014) Busan City appealed the case to the Busan Appellate Court Busan city BYTL/SICL Petition submitted to Busan District Court (January 2016) Busan city Gwangju 2 nd Beltway, Section 1 ( KBICL ) Undergoing a Supreme Court process Gwangju city PAGE 20

20 REFINANCING TRANSACTIONS 1 Three assets underwent capital restructuring transactions in FY15, all resulting in improved cash flow and enhanced investment stability Net cash inflow 2 Sum of accounting gain/loss MKIF investment KRW77.8bn KRW15.0bn KRW5.4bn Incheon International Airport Expressway Yongin-Seoul Expressway Woomyunsan Tunnel 1. For further details on each refinancing transaction, please refer to official disclosure statements : Incheon International Airport Expressway (24 Aug 2015) / Yongin-Seoul Expressway (23 Oct 2015) and Woomyunsan Tunnel (14 Jan 2016) 2. Including one-off fee incomes 3. As of 29 February 2016 Date Transaction summary Cash inflow August 2015 October 2015 January New debt package - Capital reduction - New debt package - Shareholder change - Capital reduction - New debt package - Shareholder change - Capital reduction KRW 22.9bn KRW 36.3bn KRW 18.6bn Accounting gain/loss Gain of KRW 0.4bn (3Q 2015) Loss of KRW 4.1bn (4Q 2015) Gain of KRW 18.7bn (1Q 2016) % of MKIF portfolio 3 4.7% 9.4% 1.3% PAGE 21

21 CONCLUSION FY16 Outlook MKIF's cashflow and distribution capacity expected to improve over time Continue capital management and refinancing to enhance value of MKIF Active litigation management Focus on ensuring financial and operational stability of BNP as a key management priority Review on the new opportunities fitting to MKIF s investment criteria PAGE 22

22 4 CLOSURE OF MEETING

23 5 QUESTIONS AND ANSWERS