ATLAS ARTERIA ANNUAL REPORT 2020 ANNUAL REPORT 2020 VISION AND VALUES WHO WE ARE AND WHAT WE DO We are Atlas Arteria. We are a global owner, operator and developer of toll roads. We work to create long-term value for our investors through considered and disciplined management and sustainable business practices. OUR VISION To provide the communities in which we operate with high quality, well maintained infrastructure and associated amenities that: − enhance safety; − provide economic benefi ts through reduced travel time and greater time certainty; − improve environmental outcomes through reduced fuel consumption and carbon emissions; and − provide a positive customer experience. OUR VALUES Our values guide the decisions we make and the way we behave as we work together towards our vision. In living our values, we can create strong growth for securityholders and better outcomes for our customers, our communities and our people. To us, great performance is as much about the way we get there as it is about the result. That’s why our people’s success is evaluated against our fi ve values, along with their role responsibilities. OUR GUIDING VALUES When we are steered by these values, we are acting in the best interests of one another, our securityholders, our customers and our communities. In this way, together, we’re driving better outcomes. SAFETY IS AT TRANSPARENCY ENGAGE FOR ENVIRONMENTALLY RESPECT IN EVERY OUR HEART IN ALL WE DO BETTER OUTCOMES AND SOCIALLY INTERACTION RESPONSIBLE We are always focused We are honest about We engage with We are respectful on delivering safe what we do and how one another and our We care for our of everyone in every outcomes for our we do it. We are stakeholders with a communities and the situation. We celebrate employees, contractors, accountable for our spirit of curiosity and environment. We are diversity. We know that customers and visitors actions. If we make with a learning mindset. committed to enhancing a culture of inclusion to our offi ces and roads; a mistake, we will be We seek to understand our communities and diversity breeds because nothing is open about it, learn people’s needs so we and are proactive in success. We respect the so important that we and improve from it. can deliver better reducing environmental rules and the spirit of cannot take the time outcomes. We are impacts by embedding the law and will always to do it safely. open and adaptable to responsible and act ethically, lawfully change and committed sustainable business and responsibly. to continuous practices. improvement. Contents Our Business 2 Sustainability Report 20 The Atlas Arteria Business 2 Risk and Governance 30 2020 at a Glance 3 Financial Overview 37 Chairpersons’ Review 4 Remuneration Report 42 From the CEO and Managing Director 6 Directors’ Report 60 History of Atlas Arteria 8 Financial Report 67 Strategic Framework 10 Securityholder Information 120 Portfolio and Performance 12 Corporate Directory IBC Atlas Arteria (‘ALX’) comprises Atlas Arteria International Limited (Registration No. 43828) (‘ATLIX’) and Atlas Arteria Limited (ACN 141 075 201) (‘ATLAX’). ATLIX is an exempted mutual fund company incorporated and domiciled in Bermuda with limited liability and the registered offi ce is 4th Floor, Cedar House, 41 Cedar Avenue, Hamilton, HM12, Bermuda. ATLAX is a company limited by shares incorporated and domiciled in Australia and the registered offi ce is Level 5, 141 Flinders Lane, Melbourne, VIC 3000, Australia. KEEPING COMMUNITIES CONNECTED FOR THE THINGS IN LIFE THAT MATTER MOST Case study Paris Train DON’T BE LATE FOR YOUR Time: > 4 hr Cost: € 96.40 MOTHER’S BIRTHDAY! Fontainebleau Pierre is a student studying at INSEAD in Fontainebleau. He has classes that finish at 4pm which gives him 3.5 hours APRR to get to his mother’s birthday dinner at his family home Time: ~3.5 hr Cost: € 29.10 in Villefranche sur Saône. He has three travel alternatives: APRR − APRR A6 motorway: approximately 3.5 hours France at a cost of €29.10 − No toll roads: more than 5 hours − Train: more than 4 hours, at a cost of €96.40 Only the APRR A6 motorway will get Pierre to his mother’s Free roads birthday on time. The free road alternative will take Time: > 5 hr in excess of 5 hours and the train alternative is slower, with limited scheduling and more expensive! Using these options, Pierre would have to miss his last class or miss his mother’s birthday dinner. Villefranche-sur-Saone Lyon ATLAS ARTERIA ANNUAL REPORT 2020 | 1 THE ATLAS ARTERIA BUSINESS ATLAS ARTERIA IS A GLOBAL OWNER, OPERATOR AND DEVELOPER OF TOLL ROADS, WITH A PORTFOLIO OF FOUR TOLL ROADS IN FRANCE, GERMANY AND THE UNITED STATES. WE ARE FOCUSED ON ENSURING OUR CUSTOMERS, AND THE COMMUNITIES IN WHICH WE OPERATE, ARE WELL SERVED BY THE TRANSPORT LINKS WE PROVIDE. 1 France 2 Rostock, Germany 3 Virginia, United States APRR ADELAC WARNOW TUNNEL DULLES GREENWAY Ownership: 31.14%1 Ownership: 31.17%1 Ownership: 100% Ownership: 100%3 2,318km motorway 20km commuter road 2.1km road and 22km commuter network in connecting Annecy tunnel in Rostock, route into the greater Eastern France to Geneva Germany Washington DC area 2035 concession expiry2 2060 concession expiry 2053 concession expiry 2056 concession expiry 2 1 3 Luxembourg Australia Bermuda European HQ Global Corporate HQ ATLIX Board 1 On 2 March 2020, Atlas Arteria completed a transaction to acquire an additional 6.14% in APRR and ADELAC, increasing our interest from 25.00% in APRR to 31.14% and from 25.03% in ADELAC to 31.17%. 2 APRR concession expires in November 2035, AREA concession expires in September 2036. 3 100% economic ownership. 2 | ATLAS ARTERIA ANNUAL REPORT 2020 2020 AT A GLANCE OUR BUSINESS Market Activity and Traffic Operational Highlights Strategic Highlights − Traffic across all the jurisdictions − Impacted by COVID-19 restrictions, − Successfully lifted our stake in which our businesses operate proportionate toll revenue was in APRR from 25% to just over was impacted heavily by down 19.3% to $1,196.8m and 31% in March 2020 increasing our COVID-19 movement restrictions proportionate EBITDA was down share of profits and cashflows, and REPORT implemented during the year. 22.8% to $884.8m. enhancing our governance rights. SUSTAINABILITY SUSTAINABILITY − Strict lockdown measures were − The businesses effectively and − Strengthened and enhanced the imposed across Europe in mid efficiently managed the disruption resilience and flexibility of the March. Traffic showed resilience associated with the COVID-19 balance sheet to support future and recovered strongly over the pandemic, with operations growth through the oversubscribed European summer following the remaining uninterrupted $495m equity raise and subsequent RISK AND easing of these restrictions. throughout the year. pay down of the remaining €350m in corporate debt. GOVERNANCE − Movement restrictions implemented − Progressed across all pillars in November in France were briefer of our sustainability strategy − Opened up the US market as and less stringent than those to develop long-term value a future source of institutional imposed in the first half of the for securityholders. capital through a buyback of US year. Traffic during this second retail securityholders. − At APRR, €474.1m was spent OVERVIEW lockdown was more resilient than FINANCIAL on capital projects during the − Continued work on the Warnow in the first as business activity year, and US$7.0m at the Tunnel capital restructure, to was able to continue as a result Dulles Greenway. diversify Atlas Arteria’s sources of the transformation of French of cash flow. industry to operate in a COVID-19 − Continued to develop a long-term safe manner. pathway to increase the value proposition of the Greenway for REPORT − Dulles Greenway traffic all stakeholders, and worked with performance remains subdued the Virginia State Corporation REMUNERATION given ongoing tele-work Commission (SCC) to achieve an arrangements and the high outcome under the current rate proportion of commuter-based case submission. traffic serviced by the road. REPORT DIRECTORS’ REPORT FINANCIAL FINANCIAL ATLAS ARTERIA ANNUAL REPORT 2020 | 3 CHAIRPERSONS’ REVIEW Dear Securityholder, We are pleased to present the 2020 Annual Report. Continued Board renewal During an extraordinary year, our teams responded to the Board renewal has been underway for some time and disruption caused by COVID-19 and maintained seamless a number of changes were made during the year. Nora operations in a rapidly changing environment. Our roads Scheinkestel retired as Chairman of Atlas Arteria Limited provide critical infrastructure that link communities, and (ATLAX) and a Non-Executive Director of Atlas Arteria as such our teams remained keenly focused on maintaining International Limited (ATLIX) in November 2020. We would operations and upholding the safety of our staff, our like to acknowledge the enormous contribution that Nora customers and the communities in which we operate. made in her 6 years on the Boards, and her strong leadership as Chairman during Atlas Arteria’s transformation to an At the same time, we also made significant progress towards independently managed business. creating a stronger and more resilient business and unlocked longer term value for securityholders. In the 10 years since We have recently announced that Ariane Barker will be Atlas Arteria began trading on the Australian Stock Exchange, appointed to the Board of ATLAX and will take on the role the Company has completely transformed. We have consolidated as the Chairman of the Audit and Risk Committee. our portfolio, positioned APRR as a strong cash generating In May we also announced that Caroline Foulger had joined business, and transitioned from external management to the Board of ATLIX as a Non-Executive Director. Caroline was a new, highly experienced and passionate internal team that appointed as the Chairman of the Audit and Risk Committee is actively managing our businesses for growth.