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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
OUR HEART
TRANSPARENCY
IN ALL WE DO
ENGAGE FOR
BETTER OUTCOMES
We are always focused
on delivering safe
outcomes for our
employees, contractors,
customers and visitors
to our offi ces and roads;
because nothing is
so important that we
cannot take the time
to do it safely.
We are honest about
what we do and how
we do it. We are
accountable for our
actions. If we make
a mistake, we will be
open about it, learn
and improve from it.
We engage with
one another and our
stakeholders with a
spirit of curiosity and
with a learning mindset.
We seek to understand
people’s needs so we
can deliver better
outcomes. We are
open and adaptable to
change and committed
to continuous
improvement.
ENVIRONMENTALLY
AND SOCIALLY
RESPONSIBLE
We care for our
communities and the
environment. We are
committed to enhancing
our communities
and are proactive in
reducing environmental
impacts by embedding
responsible and
sustainable business
practices.
RESPECT IN EVERY
INTERACTION
We are respectful
of everyone in every
situation. We celebrate
diversity. We know that
a culture of inclusion
and diversity breeds
success. We respect the
rules and the spirit of
the law and will always
act ethically, lawfully
and responsibly.
Contents
Our Business
The Atlas Arteria Business
2020 at a Glance
Chairpersons’ Review
From the CEO and Managing Director
History of Atlas Arteria
Strategic Framework
Portfolio and Performance
2
2
3
4
6
8
10
12
Sustainability Report
Risk and Governance
Financial Overview
Remuneration Report
Directors’ Report
Financial Report
Securityholder Information
Corporate Directory
20
30
37
42
60
67
120
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
DON’T BE LATE FOR YOUR
MOTHER’S BIRTHDAY!
Paris
Fontainebleau
Train
Time: > 4 hr
€
Cost: 96.40
Pierre is a student studying at INSEAD in Fontainebleau.
He has classes that finish at 4pm which gives him 3.5 hours
to get to his mother’s birthday dinner at his family home
in Villefranche sur Saône. He has three travel alternatives:
− APRR A6 motorway: approximately 3.5 hours
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
birthday on time. The free road alternative will take
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.
APRR
Time: ~3.5 hr
Cost: 29.10
€
France
APRR
Free roads
Time: > 5 hr
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
APRR
ADELAC
WARNOW TUNNEL
DULLES GREENWAY
2
Rostock, Germany
3
Virginia, United States
Ownership: 31.14%1
Ownership: 31.17%1
2,318km motorway
network in
Eastern France
20km commuter road
connecting Annecy
to Geneva
Ownership: 100%
2.1km road and
tunnel in Rostock,
Germany
Ownership: 100%3
22km commuter
route into the greater
Washington DC area
2035 concession expiry2
2060 concession expiry
2053 concession expiry
2056 concession expiry
2
1
3
Luxembourg
European HQ
Australia
Global Corporate HQ
Bermuda
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
Market Activity and Traffic
Operational Highlights
Strategic Highlights
−Traffic across all the jurisdictions
in which our businesses operate
was impacted heavily by
COVID-19 movement restrictions
implemented during the year.
−Strict lockdown measures were
imposed across Europe in mid
March. Traffic showed resilience
and recovered strongly over the
European summer following the
easing of these restrictions.
−Movement restrictions implemented
in November in France were briefer
and less stringent than those
imposed in the first half of the
year. Traffic during this second
lockdown was more resilient than
in the first as business activity
was able to continue as a result
of the transformation of French
industry to operate in a COVID-19
safe manner.
−Dulles Greenway traffic
performance remains subdued
given ongoing tele-work
arrangements and the high
proportion of commuter-based
traffic serviced by the road.
−Impacted by COVID-19 restrictions,
−Successfully lifted our stake
proportionate toll revenue was
down 19.3% to $1,196.8m and
proportionate EBITDA was down
22.8% to $884.8m.
in APRR from 25% to just over
31% in March 2020 increasing our
share of profits and cashflows, and
enhancing our governance rights.
−Strengthened and enhanced the
resilience and flexibility of the
balance sheet to support future
growth through the oversubscribed
$495m equity raise and subsequent
pay down of the remaining €350m
in corporate debt.
−Opened up the US market as
a future source of institutional
capital through a buyback of US
retail securityholders.
−Continued work on the Warnow
Tunnel capital restructure, to
diversify Atlas Arteria’s sources
of cash flow.
−The businesses effectively and
efficiently managed the disruption
associated with the COVID-19
pandemic, with operations
remaining uninterrupted
throughout the year.
−Progressed across all pillars
of our sustainability strategy
to develop long-term value
for securityholders.
−At APRR, €474.1m was spent
on capital projects during the
year, and US$7.0m at the
Dulles Greenway.
−Continued to develop a long-term
pathway to increase the value
proposition of the Greenway for
all stakeholders, and worked with
the Virginia State Corporation
Commission (SCC) to achieve an
outcome under the current rate
case submission.
ATLAS ARTERIA ANNUAL REPORT 2020 | 3
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS CHAIRPERSONS’ REVIEW
Dear Securityholder,
We are pleased to present the 2020 Annual Report.
During an extraordinary year, our teams responded to the
disruption caused by COVID-19 and maintained seamless
operations in a rapidly changing environment. Our roads
provide critical infrastructure that link communities, and
as such our teams remained keenly focused on maintaining
operations and upholding the safety of our staff, our
customers and the communities in which we operate.
At the same time, we also made significant progress towards
creating a stronger and more resilient business and unlocked
longer term value for securityholders. In the 10 years since
Atlas Arteria began trading on the Australian Stock Exchange,
the Company has completely transformed. We have consolidated
our portfolio, positioned APRR as a strong cash generating
business, and transitioned from external management to
a new, highly experienced and passionate internal team that
is actively managing our businesses for growth.
Building resilience and a platform for growth
During 2020 a number of significant achievements were made
to support the delivery of strong and sustainable securityholder
returns. These include:
− Successfully lifting our stake in APRR from 25% to just over
31% in March 2020, increasing our share of profits and
cashflows, and enhancing our governance rights.
− Strengthening and enhancing the resilience and flexibility
of the balance sheet to support future growth through the
oversubscribed $495 million equity raise and subsequent
pay down of the remaining €350 million in corporate debt.
− Opening up the US institutional market as a future source
of capital with completion of a Security Sale Facility which
removed all US based retail investors from the Atlas Arteria
share register.
− Progressing across all pillars of our sustainability strategy
to develop long-term value for securityholders.
− Continued work to finalise the capital restructure of the
Warnow Tunnel, thereby diversifying Atlas Arteria’s sources
of cash flow.
A final outcome on the Dulles Greenway rate case is expected
in the first quarter of 2021.
Continued Board renewal
Board renewal has been underway for some time and
a number of changes were made during the year. Nora
Scheinkestel retired as Chairman of Atlas Arteria Limited
(ATLAX) and a Non-Executive Director of Atlas Arteria
International Limited (ATLIX) in November 2020. We would
like to acknowledge the enormous contribution that Nora
made in her 6 years on the Boards, and her strong leadership
as Chairman during Atlas Arteria’s transformation to an
independently managed business.
We have recently announced that Ariane Barker will be
appointed to the Board of ATLAX and will take on the role
as the Chairman of the Audit and Risk Committee.
In May we also announced that Caroline Foulger had joined
the Board of ATLIX as a Non-Executive Director. Caroline was
appointed as the Chairman of the Audit and Risk Committee
for ATLIX in September 2020. In November Andrew Cook joined
the Board of ATLIX as a Non-Executive Director. James Keyes
and Derek Stapley retired from the Board during the year and
we take this opportunity to thank them for their significant
contributions to the business.
Caroline, Andrew and Ariane bring extensive experience
and complementary skills to the Board and we look forward
to working with them in this next phase of Atlas Arteria’s
development.
Culture and values continue to drive better outcomes
We continued to deliver on our sustainability priorities during
the year across the pillars of safety, community, our people and
environmental stewardship. COVID-19 necessitated additional
and specific focus on employees and the community. We
worked with our staff to ensure they were supported during
what was a very challenging period with extended lockdowns.
4 | ATLAS ARTERIA ANNUAL REPORT 2020
Distributions
The Boards’ objective to mitigate the impact of the pandemic
through disciplined capital management and sustainable
business practices led to the cancellation of the H2 2019
distribution in May 2020. A H1 2020 distribution of 11 cents
per security was declared in September 2020 on the back of
resilient operational performance from APRR in the first half of
the year. We are pleased to provide guidance for our final 2020
distribution of 13 cents per security, reflecting the continued
performance of APRR. This will bring the total payout for the
year to 24 cents. Our strategy remains to deliver strong and
sustainable distributions to securityholders by optimising the
performance and cash flow from our portfolio of businesses.
Outlook
In the face of uncertainty, our businesses have focused on
the areas they can control being the safety and wellbeing
of employees and customers, supporting the communities
in which they operate, building resilience and capacity for
growth and continuing to work to unlock value on behalf
of securityholders.
Moving into 2021, Atlas Arteria is well positioned with
an appropriate capital structure and improved flexibility
to delivery on its strategic objectives and pursue growth.
While a clear and present priority will be navigating the ongoing
challenges of the COVID-19 pandemic, the Boards’ focus will
be on working with and supporting management to strategically
position the Group to deliver strong and sustainable outcomes
for securityholders, governments, customers and communities
and to upholding our values of safety, transparency,
engagement, responsibility and respect.
On behalf of Atlas Arteria, we would like to thank our people,
our customers, local communities and our securityholders
for your support during the year.
Debbie Goodin
Chairman
Atlas Arteria Limited
Jeffrey Conyers
Chairman
Atlas Arteria International Limited
We continued to deliver on
our sustainability priorities
during the year across the
pillars of safety, community,
our people and environmental
stewardship. COVID-19
necessitated additional and
specific focus on employees
and the community.
ATLAS ARTERIA ANNUAL REPORT 2020 | 5
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS FROM THE CEO AND
MANAGING DIRECTOR
Performance Highlights
Operationally, the business performed well in a challenging
environment. Overall weighted average group traffic was
down 22.8%, with toll revenue down 19.3%. Weighted average
proportionate earnings before interest, taxation, depreciation
and amortisation (EBITDA) was $884.8 million, down 22.8%.
On a normalised basis, net profit after tax (NPAT) was
$69.6 million, down 61.0% from 2019.
APRR and ADELAC
APRR contributed 90% of our proportional revenue and continued
to underpin company cashflows. Across the full year, traffic
was down at APRR by 21.0%, toll revenue decreased by 17.1%
with a 20.2% decrease in EBITDA and 28.2% decrease in NPAT.
Light vehicle traffic was particularly impacted by movement
restrictions, however heavy vehicle traffic was less affected as
the APRR network is a fundamental and essential part of the
logistic network in France and remained open during the year
to support essential traffic movements. Heavy vehicle traffic
made up 39% of APRR’s toll revenue.
A number of initiatives were implemented during the year
to strengthen liquidity, resilience, and position APRR to take
advantage of near term growth opportunities.
APRR continued a strong program of debt refinancing during
the year and had €3.1 billion in liquidity at year end including
the refinanced €2.0 billion revolving credit facility. At year end,
APRR had €981.0 million of outstanding debt to be refinanced
in 2021. Both S&P and Fitch re-affirmed their A- long-term
issuer ratings for APRR, and reflecting the strength of the
APRR balance sheet, maintained their outlook as ‘stable’.
In October, Fitch also increased its short-term rating despite
the COVID-19 traffic disruption.
Work continued on important construction and capital projects,
with €474.1 million in capital projects delivered that will
continue to add value to the network.
Building sustainable value for customers and our communities
in France also remains a key priority. We continued to enhance
the customer offering, by way of example, APRR now provides
100% WiFi coverage across the service areas, 149 high
performance EV charging points and 3.3 million badges/
transponders, streamlining payments.
Warnow Tunnel
Traffic at the Warnow Tunnel decreased 7.7%, with toll revenue
down 6.5%, and EBITDA down 11.6%. These were tremendous
results in a challenging year and reflect the fact that for most
of the year Germany was less affected by COVID-19 than other
parts of Europe which meant movement restrictions were
less stringent than those experienced for example in France.
Traffic was also positively impacted by surrounding road works.
Work commenced in 2020 to finalise the capital restructure of
the Warnow Tunnel which, once completed, will be a further
milestone in the ongoing transformation of Atlas Arteria.
Dulles Greenway
At Dulles Greenway, overall traffic was down 42.7%, and toll
revenue down 42.3% from the prior year. Telecommuting and
distance-based learning were in place for much of the 2020
year and traffic remained around 45% below 2019 levels for
much of the second half.
Dear Securityholder,
The 2019 year was transformative for the business with
the seamless internalisation of management that unlocked
$67 million in savings. Under a new and highly experienced
international management team, 2020 has been a year
of building resilience while optimising and positioning our
businesses for growth, improved cash flow and returns
to securityholders.
We started the year with momentum, and this positioned us
well to manage the disruption associated with the COVID-19
pandemic. The resilience and capability of our people
shone through in their effective and diligent management
of operations, which remained uninterrupted throughout
lockdown periods.
COVID-19 also illustrated that our networks are an essential
part of society, delivering critical goods and services effectively
and efficiently. Finally, we have made significant progress
towards building resilience, financial strength and have
delivered against a number of strategic objectives.
The impact of COVID-19
While weighted average traffic for January and February
was strong, traffic across all the jurisdictions in which our
businesses operate was impacted heavily by movement
restrictions implemented in March. Pleasingly, as constraints
were relaxed, traffic at APRR and Warnow Tunnel bounced
back strongly, exceeding 2019 levels by the end of the European
summer holiday period.
After this strong recovery, traffic in our European businesses
was affected again by movement restrictions implemented in
November in response to a second wave of the COVID-19 virus.
Traffic during this second lockdown was less affected by the
movement restrictions, however, as business activity was able
to continue as a result of the transformation of French industry
to be able to operate in a COVID-19 safe manner.
The rapid return of traffic after both rounds of restrictions were
eased has been encouraging and points to the resilience of our
roads in Europe.
Dulles Greenway was significantly impacted by COVID-19
lockdown measures given the high proportion of commuter-
based traffic serviced by that road and its traffic performance
remains subdued. Looking beyond the immediate challenges,
Dulles Greenway sits in a growth corridor in Northern Virginia
and with historically strong population and employment growth
and high income per capita. With our new Dulles Greenway
CEO, Renée Hamilton joining the business in June 2020, we
are positioned well with strong leadership in place to take this
business forward.
6 | ATLAS ARTERIA ANNUAL REPORT 2020
As at 31 December 2020 Dulles Greenway had approximately
US$216 million in cash reserves. As a result of the performance
for the year, the Dulles Greenway failed to pass the lock-up
tests as defined under the debt covenants, which means that
around US$77 million that would otherwise be available for
distribution to Atlas Arteria remains included as part of the
cash reserves.
The SCC rate case continues with a decision expected in the
first quarter of 2021. We believe our submission is fair and
appropriate, even in the light of the recent market conditions.
We have been, and continue to be, actively engaged with all
relevant parties including the Virginia Department of Transport
and remain focused on achieving a positive outcome for our
business and for road users and communities in Loudoun
and Fairfax counties.
Following the outcomes of the Virginian legislative session in
early 2021, we continue to work with all relevant stakeholders
towards an appropriate outcome for the Dulles Greenway and
its customers.
Looking forward
As we look towards 2021 our focus on sustainable dividend
growth and long-term value creation remains unchanged.
We continue to explore opportunities for growth within our
existing networks and to focus on optimising and restructuring
our existing businesses to achieve better outcomes for
motorists and communities and generate more free cash
for securityholders. Safety will of course continue to be a key
focus as the world continues the fight against COVID-19.
We will look for opportunities at APRR to build on our existing
network and extend our concession term. The RCEA project
is now well underway and we are excited about other new
opportunities that may arise in France both via new road
projects but equally by working with the French Government
to deliver on its green and sustainability agenda.
We look forward to receiving the final SCC rate case decision
for Dulles Greenway and exploring opportunities to unlock
value within that business.
Our internal management team was put to the test over
the last 12 months and they have proved they are more than
capable of managing through unprecedented and severe
disruption. I would like to take this opportunity to thank all our
people from the front-line workers to management for their
persistence, resilience and strength through an extremely
challenging period.
Finally, we are grateful to our securityholders for their
continued support during the year. We look forward to being
able to continuously improve and restructure our businesses
to deliver increased distributions for our securityholders.
Graeme Bevans
CEO and Managing Director
Atlas Arteria
Executive Team
Graeme Bevans
CEO and Managing Director
A CEO and Managing Director with deep experience in complex
infrastructure investments in Australia, Europe and North
America. Passionate about driving the strategic direction and
culture of Atlas Arteria to ensure a strong, successful and
sustainable business now and for the long-term.
Vincent Portal-Barrault
Chief Operating Officer
A COO with extensive experience
in operational monitoring and the
improvement of infrastructure
businesses. Passionate about
improving the customer experience
on Atlas Arteria’s roads and giving
people more time for what’s
important to them.
Nadine Lennie
Chief Financial Officer
An experienced CFO with a
strong track record in disciplined
infrastructure investment,
strategic financial management
and risk. Passionate about
making strategic and financial
decisions that add value for
customers and shareholders.
Clayton McCormack
General Counsel and
Company Secretary
A highly experienced lawyer and
company secretary with strong
transactional, legal governance
and risk advisory experience.
Passionate about embedding
a governance framework and
culture that sustains Atlas
Arteria now and into the future.
ATLAS ARTERIA ANNUAL REPORT 2020 | 7
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS HISTORY OF ATLAS ARTERIA
HISTORY OF ATLAS ARTERIA
‘In the 10 years since Atlas Arteria began
trading on the ASX, it has completely
transformed. We have consolidated our
portfolio and transitioned from external
management to a new, highly experienced
and passionate internal team that is actively
managing our businesses for growth.’
Debbie Goodin and Jeff Conyers
2014
July
MQA completes its first
capital raising, funding the
acquisition of an additional
0.7% indirect interest in
APRR via an institutional
placement.
November
S&P upgrades APRR’s
long-term credit rating to
BBB+ with Stable Outlook.
2013
March
MQA declares its first
distribution.
December
S&P upgrades APRR’s
long-term credit rating to
BBB with Positive Outlook.
2015
February
APRR signs a €1.8bn
Revolving Credit Facility
and Eiffarie refinances and
reduces its debt facility
to a €1.5bn term loan,
securing significant
interest savings.
May
MQA reaches financial
close on the transfer of its
25% interest in the Indiana
Toll Road in the US,
receiving net proceeds
of US$25m.
August
APRR and AREA formalise
a significant agreement
with the French State,
including a capital
investment Stimulus
Package, concession
amendments and
extensions, as well
as supplemental toll
increases.
2012
February
Eiffarie refinances and
reduces its €3.8bn
acquisition debt facility
to € 2.8bn, ahead of
maturity, stabilising
the APRR/Eiffarie capital
structure and facilitating
distributions to MQA and
its co-investors.
October
Fitch initiates coverage
of APRR with a BBB+
long-term credit rating
with Stable Outlook.
2010
January
Macquarie Atlas Roads
(ASX:MQA) commences
trading on the ASX at
A$0.51 following the
demerger of Macquarie
Infrastructure Group into
two separate ASX-listed
toll road groups.
June
Eiffarie, the vehicle
through which MQA and its
co-investors hold an 81.5%
interest in APRR, reaches
an agreement to acquire a
further 13.7% in additional
interests from certain
minority holders.
The acquisition brought
Eiffarie’s total holding to
greater than 95%, allowing
it to consolidate for tax
purposes and to launch
a compulsory acquisition
of the remaining shares
in APRR.
July
MQA is included in the
S&P/ASX 200 Index as
a result of increased free
float market capitalisation.
8 | ATLAS ARTERIA ANNUAL REPORT 2020
2019
June
Eiffage and APRR
Consortium selected
as preferred bidder
for the RCEA project.
November
Announced the APRR
Transaction to increase
Atlas Arteria’s ownership
in APRR to 31.14% and
ADELAC to 31.17%, secure
governance rights in
respect of its total indirect
interest in APRR and
ADELAC and terminate all
remaining management
agreements with the
Macquarie Group.
An equity raising for
A$1.35bn was undertaken
to fund the transaction.
December
Lodged the Dulles
Greenway Rate Case
Submission with the
Virginia State Corporation
Commission.
2018
April
Agreement reached with
Macquarie Bank for the
internalisation of
management for
Macquarie Atlas Roads.
May
AGM held to approve
internalisation of
management for
Macquarie Atlas Roads.
Name changed from
Macquarie Atlas Roads
to Atlas Arteria (ASX:ALX).
June
Refinanced and increased
the corporate debt Facility,
with proceeds used
to repay the US$175m
Dulles Greenway
Acquisition Facility.
September
Completion of the
acquisition of the
remaining 30% equity
interest in Warnow Tunnel,
increasing Atlas Arteria’s
interest to 100%.
2020
February
€2.0bn APRR and €1.07bn
Eiffarie debt facilities
refinanced, improving
access to liquidity,
reducing debt costs and
deferring amortisation.
March
Completed the APRR
Transaction, increasing
Atlas Arteria’s ownership
in APRR to 31.14%
increasing our share
of profits and cashflows,
and enhancing our
governance rights.
APRR took over the
operations of the RCEA
Motorway in preparation
for the construction
of the RCEA project.
April
S&P affirmed its ‘A-/A-2’
long-term and short-term
issuer credit ratings for
APRR, and maintained
its outlook as ‘stable’.
In October, Fitch increased
its short-term rating
despite COVID-19 traffic
disruption.
June/July
Completed an equity
raising for $495m via a
$420m placement and
$75m security purchase
plan. Proceeds from the
equity raising together with
the cancelled H2 2019
dividend were applied
to the repayment of the
€350m corporate debt
facility, strengthening the
Atlas Arteria balance sheet
to support future growth.
September
Opened up the US market
as a future source of
institutional capital with
completion of a Security
Sale Facility which
removed all US based
retail investors
from the Atlas Arteria
Share Register.
2016
February
The Tunnel Maurice
Lemaire Concession
merges with the APRR
Concession in exchange
for a 10-month extension
to the APRR Concession.
MQA reaches financial
close on the sale of its
22.5% interest in the
Chicago Skyway in
the US, receiving net
proceeds of approximately
US$98m.
November
S&P upgrades APRR’s
long-term credit rating
to A- with Stable Outlook.
AREA, a subsidiary
of APRR, enters into an
agreement to acquire an
additional 46.1% interest
in ADELAC, which,
following subsequent
acquisitions of minority
interests, increases
MQA’s indirect interest
in ADELAC to 19.74%.
2017
March
MQA is included in the
S&P/ASX 100 Index as
a result of increased free
float market capitalisation.
May
MQA divests its nominal
interest in the M6 Toll
in West Midlands, UK.
Completed acquisition
of the remaining 50.0%
estimated economic
interest in the Dulles
Greenway, taking its
economic interest to
100%1. The transaction
was funded via an
institutional placement,
security purchase plan,
asset finance facility
and corporate cash.
September
MQA announces the
acquisition of an additional
4.86% interest in APRR
via MAF2, increasing its
ownership in APRR to
25.0% and total ownership
interest in ADELAC to
25.03%. The transaction
was funded via an
entitlement offer and
acquisition debt facility.
October
Fitch upgrades APRR’s
long-term credit rating
to A- with Stable Outlook.
November
The MQA Boards announce
their intention to transition
MQA to an internalised
management structure.
1 Economic interest held through
~86.6% subordinated loans
secured against the equity
held by other limited partners.
Remaining 13.4% interest held
through equity.
ATLAS ARTERIA ANNUAL REPORT 2020 | 9
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS
STRATEGIC FRAMEWORK
Strategic Theme
Initiatives
Progress
Reduce legacy
complexity and
optimise the
value of what
we own
Increasing Atlas Arteria’s
stake in APRR
Successfully lifted our stake in APRR from 25% to just over 31% in March 2020
increasing our share of profits and enhancing our governance rights.
Finalise transition to
internal management
Completed during 2020 the transition from an externally managed portfolio to an
independent internal management team that is actively managing our businesses.
Completion of the APRR Transaction saw all management agreements with the
Macquarie Group terminated, other than short term transition arrangements which
expired in the second half of the year.
Active Operational
Management to
improve earnings
and value
Disciplined capital
management to
underpin strong
and sustainable
distributions to
securityholders
Price path certainty for
the Dulles Greenway
Submitted the SCC rate case application in December 2019 and worked
with the SCC through the rate case process during 2020. A final outcome
is expected in the first quarter of 2021.
Manage business through
COVID-19 disruption
Seamless operations maintained throughout the year and support provided
to team members, healthcare workers and communities.
Move to best practice
in the way the company
operates (ESG
performance)
People
Safety
Customers
Environmental
Stewardship
For 2020, Atlas Arteria was ranked 4th out of 156 peers for ESG performance
by Sustainalytics.
APRR was awarded the most improved infrastructure company in 2020 by GRESB,
with a score of 77 up from 55 in 2019. APRR retained their overall 2nd place in the
Europe motorway sector.
Lean, high-quality corporate team in place with strong executive management,
negotiation, data management and forecasting capability to support operations
teams. Developed our People Strategy to support growth, development, diversity
and inclusion in our team.
We achieved our target of a 40% gender balance at Board level, within senior
management and across the organisation.
Refer also our Sustainability Report presented on pages 20 to 29.
Embedded a safety-first culture, implemented further initiatives to minimise
dangerous driver behaviour and developed specialised operational technology
for hazard prevention.
Improved our safety metrics with the LTIFR at APRR down to 2.7 in 2020 from 5.0
in 2019, and with zero injuries at both Warnow Tunnel and Dulles Greenway in 2020.
Refer also our Sustainability Report presented on pages 20 to 29.
Customer satisfaction surveys were undertaken at both APRR (including AREA) and
Warnow Tunnel. APRR received an overall satisfaction rating of 8.1 out of 10, and
at Warnow Tunnel, 82.8% of respondents were either satisfied or very satisfied with
their experience.
Our progress in this area is also outlined in our Sustainability Report presented
on pages 20 to 29.
Expanded greenhouse gas emission reporting across Atlas Arteria and continue
to facilitate a reduced customer footprint. Along APRR and AREA this includes
carpooling carparks, an eco-mobility education program and 149 electric vehicle
charging points.
Our progress in this area is also outlined in our Sustainability Report presented
on pages 20 to 29.
Protect financial position
of the Company during
COVID-19
A temporary halt on distributions was implemented in response to COVID-19 related
uncertainty. Distributions were reinstated at 11.0 cents per security in H2 2020
reflecting the underlying performance of APRR.
Increased net liquidity,
focus on investment
grade leverage metrics
and unlock distributions
Completed $495 million oversubscribed equity raise mid year, the proceeds of which
were used to repay the corporate debt facility, strengthen the Atlas Arteria balance
sheet and increase resilience and flexibility to pursue growth opportunities.
Both S&P and Fitch re-affirmed their A- long-term issuer ratings for APRR, and
reflecting the strength of the APRR balance sheet, maintained their outlook as
‘stable’. In October, Fitch also increased its short-term rating despite the COVID-19
traffic disruption.
In February 2020, the €1.07 billion Eiffarie debt was refinanced, deferring
amortisation to 2023, unlocking around 8cps in distributions for Atlas Arteria in 2020.
Commenced work on the capital restructure of the Warnow Tunnel, thereby
diversifying Atlas Arteria’s sources of cash flow.
Management continues to explore opportunities to unlock distribution capability
at Dulles Greenway.
Access to U.S.
institutional investors
Completed the sale facility for U.S. based non-qualified investors in September 2020,
which has unlocked our ability to access future capital from U.S. institutional investors.
10 | ATLAS ARTERIA ANNUAL REPORT 2020
Strategic Theme
Initiatives
Progress
Lengthen average
concession life
Pursue growth
opportunities
Currently examining strategies to lengthen the average concession life of our business
with a view to balancing net cash flows with longer term sustainable returns.
New RCEA (A79) 48 year concession contract signed with the State and APRR took
over operations of the motorway in March 2020.
Removing constraints
to growth
Repayment of the holding company debt allows the company to support growth
and developments at APRR in return for concession extensions.
Diversify and
Manage Risk
Further develop risk
management program
Updated and further refined governance structures, the risk management plan,
policies and internal audit activities.
Diversification
of cash flow
Commenced work on the capital restructure of the Warnow Tunnel, thereby
diversifying Atlas Arteria’s sources of cash flow.
Management continues to explore opportunities to unlock distribution capability
at Dulles Greenway.
DULLES
GREENWAY
25 YEAR
ANNIVERSARY
ATLAS ARTERIA ANNUAL REPORT 2020 | 11
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS APRR AND ADELAC
FRANCE
APRR IS A 2,318 KILOMETRE MOTORWAY NETWORK
IN THE SOUTH-EAST OF FRANCE, INCLUDING ADELAC’S
20 KILOMETRES. IT IS THE SECOND-LARGEST MOTORWAY
NETWORK IN FRANCE AND THE FOURTH LARGEST IN EUROPE.
Paris
Orléans
Troyes
Toul
Stuttgart
Germany
Mulhouse
Cosne-Cours-sur-Loire
Dijon
Bourges
France
Besançon
Zurich
Switzerland
Vichy
Geneva
Clermont-Ferrand
Lyon
Chambéry
Grenoble
Italy
Milan
Bordeaux
Valence
APRR
AREA/ADELAC
12 | ATLAS ARTERIA ANNUAL REPORT 2020
Atlas Arteria interest
in APRR and
31.14%
31.17%
in ADELAC
Concession term
APRR: 30 November 2035
AREA: 30 September 2036
ADELAC: 31 December 2060
APRR (including AREA)
Traffic: down 21.0% on pcp
Toll Revenue: down 17.1% on pcp
EBITDA: down 20.2% on pcp
ADELAC
Traffic: down 28.6% on pcp
Toll Revenue: down 27.0% on pcp
EBITDA: down 27.9% on pcp
The APRR business owns two separate concessions, the APRR
Concession and the AREA Concession. It also owns a minority
interest in the ADELAC Concession. Together, these represent
a vital motorway network that is part of several transportation
corridors for major Western European and intra-France trade
and tourism, and provides essential connectivity between
Paris and Lyon, France’s two largest metropolitan areas.
Building the network
APRR continued to invest in capital projects to grow the APRR
network and improve the customer experience with €474.1m
spent on capital projects during the year. This includes the
investments under plans previously agreed with the French
State which are the 2014-2018 management contract, the 2015
Stimulus package and the 2018 New Motorway investment plan.
Year in review
The APRR Group continued seamless operations in the face
of COVID-19 related challenges, continued to invest to improve
the customer experience, and took action to strengthen the
balance sheet and maintain liquidity. APRR starts FY2021
in a strong position to support the French Government’s road
infrastructure agenda and pursue growth opportunities in the
near term.
The number one priority for APRR is the safety and health of its
people, customers, and communities. Pandemic management
plans were implemented and a number of initiatives put in
place to support staff and the community including toll free
travel for healthcare workers and the donation of masks
to hospitals and local healthcare authorities.
From late February the French Government progressively
imposed restrictions to slow the spread of COVID-19 while
preserving essential activity. Other European countries
implemented similar measures. Large gatherings were
cancelled, limitations were placed on all non-essential travel
and European borders were closed from mid-March 2020
to all non-EU persons.
Restrictions were lifted from mid-May, resulting in a strong
traffic recovery, however, with the advent of the second wave
of COVID-19, movement restrictions were again implemented
from November. These restrictions were briefer and less
stringent than those imposed in the first half of the year. Traffic
at APRR for the fourth quarter was down only 24.8% compared
with 2019 (compared to 51.0% in the second quarter) and as
restrictions eased in the lead up to Christmas, traffic in the
month of December continued to recover.
As a result of these restrictions during the year, traffic was
down by 21.0%, resulting in toll revenue down 17.1% and
EBITDA down 20.2%. However, the resilience of our network
was evident with traffic recovering strongly after restrictions
were eased.
Improving customer services
A number of network improvements were made during
the year.
As a first in France, in September, AREA opened an eight
kilometre High Occupancy Vehicle (HOV) lane near Grenoble
on the A48. To minimise congestion and incentivise multiple
passenger vehicle use, during peak hour the left lane is
reserved for vehicles with two or more passengers, taxis and
electric vehicles. Further, lane dedication will be enforced by
artificial intelligence.
The service offering for Electric Vehicles (EV) has been expanded
to 149 very high and high performance charging points across
the network. Through the acquisition of KiWhi Pass Solution in
May 2020 and the launch of ‘Mango Mobilités’ in October 2020,
APRR has further enhanced its mobility services with access
to France’s largest fast charging network for electric vehicles
and access to all APRR’s offerings through a single website and
mobile app. Through an agreement with Fastned, large fast
charging stations which enable many vehicles to be charged
simultaneously, will be built on nine sites across the network,
with the first installations planned for 2021.
From June 2020, WiFi access was available across 100%
of the service areas across the network.
Awards continue
APRR continues to be recognised for its achievement in
the areas of diversity, equal opportunity and discrimination
prevention. In February, the French State renewed APRR’s
‘Label Diversité’ certifying its policies in the above areas, and
in the same month APRR was named France’s Best Employer
in the sector for the sixth year in a row by Capital magazine.
APRR significantly improved its GRESB score from 55 to 77 and
maintained its second place in the Europe motorway sector. It
was also awarded the most improved infrastructure company
in 2020. GRESB is a broadly used benchmarking tool in Europe
for Environmental, Social and Governance (ESG) matters, and
the rating reinforces APRR as a high performing business
measured across a range of important factors.
Traffic (VKTm over past 6 years)
Traffic (VKTm over past 6 years)
Toll Revenue ( m)
30000
30000
25000
25000
22,236
22,236
23,061
23,061
23,810
23,810
24,322
24,322
24,581
24,581
18,906
18,906
19,580
19,580
20,124
20,124
20,464
20,464
20,695
20,695
15000
15000
10000
10000
19,413
19,413
15,856
15,856
3,330
3,330
3,481
3,481
3,686
3,686
3,859
3,859
3,886
3,886
3,557
3,557
2015
2015
2016
2016
2017
2017
2018
2018
2019
2019
2020
2020
Heavy vehicles
Heavy vehicles
Light vehicles
Light vehicles
Total traffic
Total traffic
3000
2500
2000
1500
1000
500
0
9
0
7
7
3
4
,
1
2
5
7
5
0
5
,
1
7
9
7
6
5
5
,
1
7
4
8
6
1
6
,
1
8
6
8
6
6
6
,
1
2
1
8
8
8
2
,
1
2015
2016
2017
2018
2019
2020
Light vehicles
Heavy vehicles
ATLAS ARTERIA ANNUAL REPORT 2020 | 13
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS APRR AND ADELAC
FRANCE
Reinforcing financial stability
APRR’s balance sheet and financial position was further
strengthened during the year.
There were three bond issues of €500m each during 2020, all
receiving strong support from the Eurobond market reflecting
the underlying quality of the business. In addition, APRR
refinanced €921m of Commercial Paper. The average cost
of debt at APRR has reduced from 1.5% to 1.2%.
In February 2020, APRR and Eiffarie collectively refinanced
€2.87bn of bank debt comprising a €1.80bn revolving credit
facility at APRR and a €1.07bn term loan at Eiffarie. Both were
structured as ESG linked loans, further demonstrating the
commitment from APRR and its shareholders to safety and
the environment.
In April, S&P reaffirmed its ‘A-/A-2’ long-term and short-term
issuer credit ratings and stable outlook for APRR, despite
the impacts and outlook for COVID-19. In October, Fitch
re-affirmed its A- long-term issuer rating for APRR and also
increased its short term rating from F2 to F1 despite the
COVID-19 traffic disruption.
Adding future value
We have a strong pipeline of growth projects due to complete
in the coming years including the creation of the A71
‘Montmarault’ intersections, the widening on A75 Clermont-
Ferrand to Le Crest and A41, the A48/A480 project, the A43-A41
Chambery junction, the completion of 19 wildlife crossings, and
we see many opportunities to continue to expand the APRR
network and provide solutions to the French Government at a
state and local level.
Capital expenditure for the next two years is expected to be
approximately €800m and on average around €200m per annum
thereafter (excluding any further investment plan agreed with
the State).
A section of the Central Europe Atlantic Road (RCEA/A79), a
strategic road for intra-European trade flows, is being upgraded
and widened to meet motorway and environmental standards.
The RCEA/A79 project will upgrade an existing 89km sub-section
of the RCEA to motorway standard with 2x2 lanes plus a
hard shoulder that will significantly improve safety. The A79
stretches between Sazeret and Digoin interchanges and
connects with the A71 on the APRR network.
In March 2020, a 48 year concession contract was signed
with the French Government for the RCEA/A79 Project
and APRR took over the operation of the motorway. The
construction cost of the project is estimated to be €600m.
Construction commenced in mid-2020 and is due to be
completed in late 2022.
APRR continues the ongoing dialogue with the French State
to improve the country’s road network and achieve the State’s
road development objectives.
14 | ATLAS ARTERIA ANNUAL REPORT 2020
Case study
KEEPING COMMUNITIES
CONNECTED
Edouard is a truck driver. He hauls essential supplies and
parcels around France. Edouard’s ability to deliver parcels
efficiently and safely was more important than ever during
2020 as he carried essential supplies to those at work and
home during lockdown. Edouard could haul medical supplies
such as masks and personal protective equipment as well as
presents from loved ones from Orly’s airport to Dijon’s hospital
in 2 hours and 50 minutes using the APRR network saving
1 hour and 30 minutes as compared to the fastest alternate
route. This increased his capacity to deliver other essential
supplies by 1 day each week.
As well as timely and safe travel, the APRR network provided
Edouard with quality food, amenities and easily accessible
heavy vehicle parking facilities making his trips more
comfortable and convenient.
Paris
Orly Airport
APRR
APRR
APRR
Time: ~3.5 hours
Time: 2 hr, 50 min
Cost: €29.10
Cost: 46.90
€
Free roads
Time: 4 hr, 20 min
Dijon
Hospital
ATLAS ARTERIA ANNUAL REPORT 2020 | 15
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS WARNOW TUNNEL
ROSTOCK, GERMANY
THE WARNOW TUNNEL IS A 2.1 KILOMETRE TOLL ROAD,
INCLUDING A 0.8 KILOMETRE TUNNEL UNDER THE WARNOW
RIVER. IT OFFERS CUSTOMERS A RELIABLE, COST-EFFECTIVE
WAY TO TRAVEL ACROSS THE RIVER.
Warnemünde
Warnow Tunnel
Rostock
Atlas Arteria interest
100%
Concession expiry: 2053
Traffic: down 7.7% on pcp
Toll Revenue: down 6.5% on pcp
EBITDA: down 11.6% on pcp
Hamburg
Berlin
Traffic (Trips (m) over past 6 years)
Toll Revenue ( m)
5.20
5.04
4.88
4.72
4.56
4.40
4.24
4.08
3.92
3.76
3.60
4.94
4.73
4.56
4.15
4.22
4.28
2015
2016
2017
2018
2019
2020
16.0
12.8
9.6
6.4
3.2
0.0
6
.
3
1
7
.
2
1
6
.
2
1 1
.
1
1
1
.
0
1
6
.
0
1
2015
2016
2017
2018
2019
2020
16 | ATLAS ARTERIA ANNUAL REPORT 2020
A separate study evaluated the customer behaviour and
orientation approaching the toll plaza and the payment
means offered in the different lanes. Findings indicate
adjustments to signage and payment options may provide
improvements to safety and the overall customer experience.
In 2021 we will establish an implementation plan for
improvements, and work with the local authorities
for approvals, where necessary.
Investing in the Tunnel
Annual maintenance at Warnow Tunnel is aimed at improving
safety for customers and minimising environmental impacts.
This year’s program confirmed the good state of the tunnel
equipment and included a check of the ventilation system, the
replacement of the low voltage switching cabinets in one tunnel
tube and a complete tunnel clean which will reduce energy
consumption costs.
Adding future value
In 2020, work continued regarding the capital restructure
for the Warnow Tunnel. In undertaking this restructure, the
arrangements will reflect the strength of the underlying
performance of the business, and the desire is to create a more
balanced long-term capital structure and unlock distributions
for the first time since the Tunnel’s opening in 2003.
A new Head of Operations has been appointed and started
on 1 February 2021. His previous experience at the business
during and shortly after the Tunnel’s construction positions
us well to further strengthen the technical capabilities
of the business in the coming years.
The Warnow Tunnel is located in Rostock in North Eastern
Germany. The Port of Rostock is the fourth largest port in
Germany. The Warnow Tunnel offers an alternative to using
the ferry to cross the river or 19km of untolled roads through
the shopping precinct of Rostock which often suffers from
congestion during peak periods.
Year in review
While operations continued seamlessly under COVID-19
protocols, performance was impacted by German Government
imposed COVID-19 restrictions from mid-March including
temporary border controls with surrounding countries.
Restrictions began to lift progressively from mid-April with the
City of Rostock recording relatively few cases, which permitted
a more rapid easing of restrictions. In response to the second
wave of COVID-19 in Europe, Germany initially entered
‘lockdown light’ in early November for a period of four weeks
with restrictions aimed at limiting social activities, however
schools, shops and workplaces remained open. With continued
increasing case counts, Germany moved to a hard lockdown
for the period between mid December 2020 and into February
2021, where all non-essential shops were closed, home
schooling returned for high school students and 15km travel
limits imposed in hot spot areas.
Traffic for the year was down 7.7%. This resulted in a decrease
in toll revenue of 6.5% and a decrease in EBITDA of 11.6%.
Continuing roadworks on competing routes in the City of
Rostock supported traffic at the Warnow Tunnel despite the
COVID-19 related travel restrictions. This particular program
of roadwork is expected to complete progressively over the
next 12-18 months.
A customer survey of approximately 1,600 customers in
collaboration with Rostock University was completed in
October 2020 to better understand customer needs and
quantify the overall level of satisfaction with the Warnow
Tunnel. Around 83% of the respondents were satisfied overall
with the Warnow Tunnel and 94% perceive a time saving of
more than 10 minutes compared to other alternatives.
Case study
FAMILY
COMES FIRST
Andrea lives in Lütten Klein, her daughter Lea, and
her young grandchildren live on the other side of town.
Lea and her husband both work full time, and Andrea
looks after her grandchildren every afternoon on Monday
through Thursday. Taking the Warnow Tunnel takes
Andrea on average 30 minutes each day at a cost
of €5.56, saving her about an hour a day compared
to using the free alternative route.
Lütten Klein
Warnow Tunnel
Time: ~15 min
Cost: 2.78
€
Warnow
Tunnel
Toitenwinkel
Free roads
Time: ~50 min
ATLAS ARTERIA ANNUAL REPORT 2020 | 17
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS DULLES GREENWAY
VIRGINIA, USA
25 YEAR
ANNIVERSARY
THE DULLES GREENWAY IS A 22 KILOMETRE TOLL ROAD
IN LOUDOUN COUNTY, VIRGINIA IN THE USA. IT OFFERS
CUSTOMERS A COST-EFFECTIVE WAY TO TRAVEL BETWEEN
NORTHERN VIRGINIA AND THE GREATER WASHINGTON AREA.
Leesburg
Dulles
Greenway
Loudoun
County
Dulles
International
Airport
Rockville
Bethesda
Maryland
Silver
Spring
Tysons Corner
Falls
Church
Washington DC
Arlington
Reagan
National
Airport
Fairfax
Virginia
Traffic (Trips (m) over past 6 years)
18.63
19.49
19.18
18.32
17.80
10.20
2015
2016
2017
2018
2019
2020
25
20
15
10
5
0
18 | ATLAS ARTERIA ANNUAL REPORT 2020
Atlas Arteria economic interest
100%
Certificate of Authority
expiry: 2056
Traffic: down 42.7% on pcp
Toll Revenue: down 42.3% on pcp
EBITDA: down 47.9% on pcp
100
80
60
40
20
0
Toll Revenue (US$m)
5
.
0
9
7
.
1
9
4
.
0
9
3
.
9
8
0
.
4
8
6
.
1
5
2015
2016
2017
2018
2019
2020
The Greenway is located in one of the fastest growing and more
affluent counties in the United States, providing customers
with a reliable and safe connection from Leesburg, VA to the
west, through Loudoun County to Dulles International Airport
and connector roads to Washington DC to the east. For over
25 years, the Greenway has connected commuters to their jobs,
communities to recreational venues, and families to each other
by providing a safe, predictable and faster transport option.
Year in review
Traffic on commuter roads in Virginia, including the Greenway,
was challenged during 2020 with overall traffic down 42.7%
translating to a 42.3% reduction in toll revenue and a 47.9%
reduction in EBITDA.
From February, in response to COVID-19, the United States
Government commenced closing its borders to foreign nationals
and encouraged all US residents to cancel non-essential travel.
In March, Virginia implemented various movement restrictions,
and schools in the region surrounding the Greenway, began
transitioning to online learning. After a period of strict
lockdowns, restrictions in Virginia began to relax from end May,
however, teleworking continued to be strongly encouraged.
Schools and kindergartens were progressively reopened from
end October, however, with ongoing high case counts, new
restrictions were imposed in mid-November which continued
into the new year.
Safety continued to be a key focus, with enhanced cleaning
and sanitisation for employees, including the provision of
gloves, masks and face shields, revised shift scheduling and
terminating cash collection.
Despite the challenges of COVID-19, we continued to focus
on improving the customer experience. Several projects will
improve safety and ease congestion:
− DTR Connector Phase 2: completed on schedule and on
budget, opening to traffic in July.
− West End Ramp Reconfiguration: work began in May and was
completed ahead of schedule, opening to traffic in August.
− Leesburg Bypass Improvement Project: initiated construction
tender process in December. Work is expected to begin
in Q1 2021 with completion expected by early 2022.
Other successful initiatives included:
− Successfully implemented new asset management software
to enhance motorway operations, maintenance and safety.
− Participated in the Northern Virginia Regional Multi-
Modal Mobility Program which is a public-private sector
collaboration to improve travel safety, reliability, and mobility.
− Installed additional cameras at the mainline toll plaza
to enhance safety and toll enforcement.
− Relocated the main offices to a new smaller office building
better suited to our employee base, reducing energy usage
and overheads.
Ms. Renée N. Hamilton commenced as CEO in June 2020.
She is an infrastructure and transportation leader, who is
committed to the local community. Ms. Hamilton joins the
Greenway following a distinguished 32-year career at the
Virginia Department of Transportation, where she served most
recently as Deputy District Administrator for Northern Virginia.
The Greenway lodged its rate case application with the SCC in
December 2019, seeking peak toll increases of 6-7% p.a. and
off-peak increases of 5-6% p.a. for the five-year period from
1 January 2021 through 31 December 2025. The Commissioners
are yet to issue a Final Order. Atlas Arteria believes that the
submission is fair and reasonable and looks forward to a
favourable outcome.
Financial strength
Dulles Greenway remains well placed from a liquidity perspective,
with US$216.3m of cash on the balance sheet as of
31 December 2020. Whilst theoretically, US$77.0m was
available for distribution, due to the reduced traffic in 2020,
the Greenway did not pass its 1 year and 3 year lock-up tests
as at 31 December 2020.
Adding future value
We are committed to fully optimising the value of the
Greenway business, reducing risk and improving cash flows
to Atlas Arteria and its securityholders. We continue to work
closely with our communities and key stakeholders including
government to deliver mutually beneficial outcomes.
Case study
WHEN TIME
WITH FAMILY
IS PRECIOUS
Rachel lives in Ashburn and works as a doctor in Reston
Hospital. Her time over the past 6 months has been
particularly busy and she uses the Greenway each
day to travel safely to and from work, saving between
25%–35% travel time each way. She can settle her
children each morning and conveniently and reliably
travel to work for her morning shift. After a busy day
with growing patient numbers, she can travel home
quickly and safely to enjoy dinner with the family and
her children’s stories of feats conquered during the
day. Gaining moments with those you love is precious,
and even more so in times of uncertainty.
Paris
Ashburn
Dulles
Greenway
Dulles Greenway
Time: 16–24 min
Cost: US$5.80
Free roads
Time: 22–40 min
Reston
Hospital
Lyon
ATLAS ARTERIA ANNUAL REPORT 2020 | 19
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS SUSTAINABILITY
AT ATLAS ARTERIA, WE ARE COMMITTED TO PLAYING A
POSITIVE ROLE IN SOCIETY AND CREATING LONG-TERM VALUE
FOR OUR STAKEHOLDERS. FROM INVESTORS AND CUSTOMERS,
TO EMPLOYEES AND COMMUNITIES, WE TAKE OUR
RESPONSIBILITIES SERIOUSLY, EMBEDDING SUSTAINABLE
BUSINESS PRACTICES AS CORE TO OUR GROWTH.
Our Sustainability Framework
SUSTAINABILITY PRIORITIES
SAFETY
Whether working or
travelling with us, safety
is our primary focus.
CUSTOMERS
AND COMMUNITY
We connect people and
communities through
safer and faster
transport options
that make life easier.
OUR
PEOPLE
We foster an engaged,
collaborative and
diverse workforce,
and together deliver
business success.
GOVERNANCE
We are accountable and
transparent in all our
business dealings.
BUSINESS FUNDAMENTALS
ETHICS, VALUES
AND CULTURE
We act ethically and
promote a culture
founded on our five values:
Safety, Transparency,
Engagement,
Environment, Respect.
SUSTAINABLE
GROWTH
We focus on growing
our business and
returns for the
long-term while
delivering positive
social benefit.
ENVIRONMENTAL
STEWARDSHIP
We actively manage
our impact on the
environment and
provide solutions that
enable customers to
minimise their footprint.
INNOVATION
AND TECHNOLOGY
We monitor innovations
and technology and
proactively respond
to changing needs
and expectations.
Implemented through policies and programs. Will be monitored through KPIs and targets.
ESG
GLOBAL 50
TOP RATED
ESG
INDUSTRY
TOP RATED
M o s t I m p r o v e d 2 0 2 0
M o s t I m p r o v e d 2 0 2 0
Atlas Arteria ranked
4th
out of 156 peers
in the Sustainalytics
ESG ratings
APRR ranked
2nd
in the Europe
motorway sector
in the GRESB ESG
benchmark
20 | ATLAS ARTERIA ANNUAL REPORT 2020
0
lost time injuries at Dulles
Greenway and Warnow Tunnel.
46% reduction at APRR: 2.7 in
2020 compared to 5.0 in 2019
50%
gender balance across Board,
senior management and the
broader corporate team
GHG emission reporting
expanded across the
portfolio and head office
Over
80%
customer satisfaction at APRR,
AREA and Warnow Tunnel
(81% for APRR and AREA
and 82.8% at Warnow)
Our approach to sustainability
The sustainability agenda continues to evolve rapidly. This
past year has brought the social element of ‘environment,
social, governance’ (ESG) to the fore. Health, safety, flexibility,
inclusion and community have been brought sharply into focus
through the COVID-19 pandemic, Black Lives Matter movement
and bushfires. Stakeholder expectations continue to grow for
businesses to make a positive difference and deliver real value
to society.
As a global infrastructure owner, operator and developer,
we manage our business for the long-term. We seek to create
lasting value for our stakeholders and sustainable returns
for our investors.
Our Sustainability Framework helps guide our actions
and focus our attention. Developed in 2019, it is based on
the outcomes of a materiality assessment that identified
those topics that matter the most to the business and its
stakeholders (see Materiality section).
Our strategy and approach is informed by our four priority
areas: safety; customers and community; our people; and
environmental stewardship. These present the greatest ESG
opportunities and risks to the business, and the topics of
greatest importance to our stakeholders. Focusing on these
elements help us to secure a growing and resilient business.
These four priorities are underpinned by a set of four business
fundamentals that enable us to fulfil our future growth
potential. These are good governance; an ethical culture;
an emphasis on sustainable growth and keeping abreast
of technology and other innovations.
The spotlight on some of our existing material topics has
intensified this year. Ensuring health and safety – for our
people, customers, and communities – has been an ongoing
focus; while attention on diversity, inclusion and climate
change continues. We are pleased to be able to report strong
progress in these areas. We continue to look for opportunities
to improve, as we move forward.
Materiality
We undertook a materiality assessment in late 2019 to
identify those topics that matter most to the business and its
stakeholders. The process was carried out by an independent
external advisor. Internal and external stakeholders were
engaged through a series of surveys, interviews and roundtables,
including investors, business partners, suppliers and employees.
Atlas Arteria Board members and the senior leadership
team reviewed insights gained and identified those areas
imperative to sustainable business success. Our material
issues are reflected in the ‘sustainability priorities’ and
‘business fundamentals’ of our Sustainability Framework.
We continue to monitor issues and reflect on changes
throughout the year to capture and address topics that may
be rising up the agenda.
Sustainability governance
Sustainability at Atlas Arteria is overseen by our Boards. Our
Sustainability Framework identifies those elements that drive
value for the business and its stakeholders. We are developing
a set of KPIs to underpin the framework and help focus our
actions. Performance is regularly monitored by the senior
leadership team.
Each of our portfolio businesses is responsible for adopting and
maintaining its own environmental and social risk management
framework appropriate to the country in which it operates.
Our ability to control or influence the ongoing management
of these issues differs for each business.
At APRR (including ADELAC), Atlas Arteria has a non-
controlling interest and accordingly we appoint Board
representatives to promote and support the implementation
of good practices to the extent that they are able to under
the co-ownership arrangements.
For Dulles Greenway and Warnow Tunnel, where Atlas Arteria
holds a 100% economic interest, we work with the Boards and
management of the businesses to ensure that policies and
procedures are in line with our standards and expectations.
The ESG performance of each business is reported to the
Atlas Arteria Boards at least every six months. Major safety,
environmental and social incidents are reportable as soon
as possible after occurrence, and are notified to the Boards
within 24 hours.
New investments
Atlas Arteria aims to invest in businesses that regard
environmental and social issues as a high priority, or in
businesses where there is a capability to create a strong
environmental and social focus.
Accordingly, all potential investments are screened for
environmental and social risks, including safety and climate
change, before presentation to the Atlas Arteria Boards
for consideration.
Sustainability policies
We have a suite of corporate policies that sets out our
expectations for responsible business. Our ESG risks are
managed through our risk management framework, with
supporting policies covering: anti-bribery & corruption, risk
management, workplace health & safety, environmental
& social responsibility, diversity & inclusion and employee
conduct. This year we introduced our Supplier Code of Conduct,
formalising our expectations of suppliers.
These policies are available on the Atlas Arteria website
at https://www.atlasarteria.com/sustainability/framework-
policies-stakeholders?scroll=policy
Both the corporate team and management at our wholly-owned
businesses have been trained on the policies and copies are
available to all staff.
Stakeholder engagement
We are open and transparent about how we do business. Clear
dialogue with our stakeholders is important to building strong
relationships, maintaining trust and enhancing our business
performance for the long-term.
Our key stakeholders include our securityholders, portfolio
company employees, customers, governments and regulators,
co-investors, suppliers and the wider communities in which
we operate.
2020 has reinforced the need to be responsive and agile. We
have worked to keep ourselves informed, proactively engage
with our stakeholders and understand and address changing
concerns, expectations and demand.
ATLAS ARTERIA ANNUAL REPORT 2020 | 21
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS SUSTAINABILITY
SAFETY
Key achievements and delivery of the 2020 priorities
Safety across our businesses is our top
priority. We focus on a safety-first culture
while having the right equipment and the
right training to do the job. We seek to
ensure that all people who work for us
and use our roads return home safely.
− Improved safety metrics across the businesses
− Implemented standardised safety reporting rules,
including near-miss reporting, across Dulles Greenway
and Warnow Tunnel
− Held a Safety Week in June 2020 at APRR
− Completion of a customer study at Warnow Tunnel
to address dangerous driving behaviours
− Completed trials of the connected safety boot at APRR,
due for staged roll out from 2021
− Implementation of operational software, Asset Vision,
at Dulles Greenway
Number of lost time injuries
Lost time injury frequency rate
2017
2018
2019
2020
2017
2018
2019
2020
Head office
APRR
Warnow
Dulles Greenway
NA
29
0
0 2
NA
26
0
0
0
25 1
1
0
0
13
0
0
Head office
APRR
Warnow
Dulles Greenway
NA
5.7
0
0 1
NA
5.2
0
0
0
5.0 1
14.9
0
0
2.7
0
0
Safety of our people
With the onset of COVID-19, new ways of doing business
have been introduced to maintain the health and safety
of our employees and customers.
Across our networks, we have accelerated the move to
contactless payment options, revised customer support
offerings, modified work processes for employees, and
provided gloves, masks and face shields for cashiers. Business
preparedness and continuity plans have been revised and
working from home arrangements were implemented where
possible. This is on top of the day-to-day safety initiatives that
have continued across our businesses.
We pursue a safety culture, where every person thinks
safety-first. This is true from the top down, with ‘safety
moments’ integrated into Board agendas to reinforce safety
knowledge and awareness.
APRR has introduced ‘15-minute safety sessions’ encouraging
employees to make individual commitments to risk prevention.
Managers are specifically trained to facilitate these. APRR
also ran a Safety Week in June 2020, led by key staff (see case
study). Near-miss reporting continues at Dulles Greenway.
Warnow Tunnel will begin reporting near-misses from
January 2021. Safety reporting is now standardised at our
fully controlled entities.
Opportunities to share learnings are also pursued, both
internally and with contractors. Dulles Greenway holds
combined safety meetings with contractors throughout the year
to review performance and identify risks and mitigating activities.
Actions identified for 2021 include exploring opportunities to
modernise equipment and reorganise the winter operations
centre to improve safety.
Motorway employees undertake regular safety training,
incorporating both operational elements (e.g. working safely
outdoors, and preventing slips, trips and falls) and online
safety (e.g. on cyber threats and best practices).
APRR operates a safety training centre in Bourg-en-Bresse.
raising awareness around risks of the motorway work
environment. The training is enhanced through virtual reality
and computer-based learning. SafeStart training, initiated in
2016 for operational employees, was due to be rolled out to all
employees by 2020. This was delayed due to COVID-19, and the
training will recommence in 2021, when safe to do so.
Road user safety
We work hard to ensure the safety of our roads. Motorway
maintenance is a key factor in this. We focus on ensuring that
our customers experience comfort and safe driving conditions
on their journeys. On APRR and AREA alone, around
€100 million per year is devoted to maintaining pavement
and engineering structures, while quarterly external Asset
Risk Management reviews are undertaken at Warnow.
In 2020, Dulles Greenway implemented software to support
its maintenance and operations activities (see case study).
Capital works on the Greenway also seek to offer better
driving conditions, with a reconfigured ramp at the west end
of the road and additional lane at the east. The Greenway’s
safety record continues to improve. Between 2014-2019, it
experienced less than 8% of the injury rate occurring on other
Virginia and Loudoun County roads.3
1 Restatement of 2019 number of lost time injuries and LTIFR for APRR is required due to a reclassification of injuries by Social Security as work place related
incidents. The 2019 lost time injuries have therefore been restated from 23 to 25, and the 2019 LTIFR from 4.6 to 5.0.
2 An employee received treatment for a back injury in 2018 that was thought to have been related to a December 2017 work incident (that did not result in serious injury
at the time). The injury and incident have since been found to be unrelated. This has led to the restatement of the 2017 LTIFR from 11.3 to 0.
3 On average there were 6.5 accidents with injuries per 100 million vehicle miles travelled (VMT) on the Greenway between 2014 and 2019. Loudoun County roads
experienced 84.1 injuries per 100 million VMT over the same period, with Virginia experiencing 95.7. The 2020 accident rate for Dulles Greenway was 3.9 accidents
with injuries per 100 million VMT, compared with 4.4 in 2019.
22 | ATLAS ARTERIA ANNUAL REPORT 2020
To address dangerous driving at the toll plaza, Warnow
Tunnel has undertaken a customer behaviour study to
identify and address underlying causes. Findings indicate
adjustments to signage and payment options may provide
improvements. In 2021 we will establish an implementation
plan for improvements, and work with the local authorities
for approvals, where necessary.
We also aim to improve road user safety and awareness. For
example, APRR’s updated customer website (https://voyage.
aprr.fr) regularly seeks to raise customer awareness around
safety issues, e.g. on the risks of poorly maintained tires and
the best times to change them for summer/winter use.
Case study
Case study
ASSET VISION AT
DULLES GREENWAY
APRR
SAFETY WEEK
In September 2020, Dulles Greenway implemented Asset
Vision software for operational excellence. This provides
a platform for comprehensive reporting on assets under
management, from inspections and maintenance to
construction work. Amongst other things, it enables clear
documentation of any safety issues identified and informs
all users on current activities and issues on the Greenway.
Assets under management include pavement, bridges,
buildings, road restraint systems, signs, gantries,
culverts, drainage and vegetation areas.
APRR’s Safety Week was held in June 2020. Focused on
prevention, it included four dynamic workshops, with a
filmed introduction by the CEO. The workshops consisted
of exercises focused on matters such as mental agility
and effective decision making.
Priorities for 2021
− Continue to embed a safety-first culture amongst our
people and across our businesses.
− Implement recommendations of the Warnow customer
behaviour study to improve customer behaviour at the
toll plaza.
− Continue SafeStart training for all employees at APRR.
− At the Dulles Greenway, explore a better layout for winter
operations to better manage safety during the loading
of salt, and a larger enclosed maintenance environment.
25 YEAR
ANNIVERSARY
ATLAS ARTERIA ANNUAL REPORT 2020 | 23
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS
SUSTAINABILITY
CUSTOMERS AND COMMUNITY
Key achievements and delivery of the 2020 priorities
Connecting customers and communities
is what we do. Improved safety, reduced
travel times, enhanced comfort and
mobility at a reasonable cost are core
offerings of our businesses. We want
to be recognised as a valuable addition
to communities, wherever we operate.
− Opening of France’s first reserved carpool lane on the
A48 near Grenoble
− Free travel for healthcare providers along the APRR
and Dulles Greenway motorways
− Donation of masks to the community by APRR
− Dulles Greenway celebrates its 25-year anniversary
− Completion of the east and west end works to improve
ease of travel at the Dulles Greenway
− Development of new digital services at APRR to keep
customers better informed of payment, travel and
value options
Connecting communities
During 2020, the ability for our communities to connect during
COVID-19 has at times been severely reduced.
APRR, donated face masks in France, and kept customers
informed on changing restrictions through our social media
and advertising avenues.
During widespread lockdowns, the importance of our road
networks shifted: from connecting people with work, family,
friends and holidays, to connecting communities by ensuring
continued commerce and accessibility to delivered-to-door
products and services.
Through these turbulent times we have sought to support our
communities and customers in meaningful ways. We provided
free travel for healthcare workers on Dulles Greenway and
APRR has also ensured that truck drivers have appropriate
services available in these restricted times. This includes
maintaining access to showers, implementing food trucks and
opening selected catering rooms to enable drivers to enjoy
a rest and hot meal, in addition to take-away provisions.
Underlying these actions, we continue to make improvements
to support our fundamental aims: to provide access to jobs,
businesses and workplaces, family and friends and other travel
needs, and to make travel easy.
Case study
IMPROVING
DIGITAL SERVICES
Over the last year, APRR and AREA have worked to offer
improved digital services to customers, keeping them
informed and providing easy access to information.
APRR’s new-look customer website provides real-time
information on current and forecast traffic status and
roadworks to better anticipate driving conditions.
The Mango mobilités app enables customers to easily
manage their account, access benefits, track consumption
and contact customer service. The associated Amazon
Alexa voice application provides quick access to service
area information (restaurants, fuel stations, electric
charging stations, shops, hotels, etc.) on the go.
Additional tests of new services are also being
undertaken. For example, AREA is testing a carpooling
app to enable carpoolers to see, in real time, the
availability and locations of car parks at the La Grive
carpooling area on the A43.
The A48/A43 section between Lyon and Grenoble is
also host to testing intelligent transport systems. This
enables communication between vehicles, and between
vehicles and road infrastructure. The systems will
provide equipped vehicles with real-time information,
e.g. on traffic conditions, broken down vehicles,
construction sites, accidents, ongoing salting and snow
removal as well as weather conditions.
24 | ATLAS ARTERIA ANNUAL REPORT 2020
Making travel easy
An enduring priority for our roads is to pursue opportunities
that respond to/anticipate customer demand and improve
customers’ ease of travel.
We pursue investments in infrastructure and digital
transformation as two primary routes to providing a safe,
reliable and efficient driving experience for our customers.
Over the last year, this has included:
− Infrastructure improvement projects on the east and west
ends of Dulles Greenway help alleviate peak morning and
evening congestion and improve safety at merges.
− New and updated digital services and apps for APRR and
AREA (see case study).
− Introduction of France’s first motorway carpool lane on the
A48 (see case study in Environment section).
− Continued testing of free-flow tolling on APRR, intended
for use on the new A79 Route. This will remove the need for
stopping or slowing at toll plazas, thereby improving safety
and reducing greenhouse gas emissions.
− Improved payment facilities on Warnow, including online
recharging of pre-paid cards.
Customer satisfaction
This year, customer satisfaction surveys were undertaken
on both APRR (including AREA) and Warnow Tunnel.
For Warnow, the survey was the first since 2009. Approximately
1,600 responses were collated, with 82.8% of respondents
either satisfied or very satisfied with Warnow Tunnel. Only 2.4%
were dissatisfied. Feedback is currently being evaluated and
will inform future actions for improvement.
APRR and AREA conduct annual satisfaction surveys. In 2020,
2,567 customers were engaged, with an overall satisfaction
rating of 8.1 out of 10 – a rating consistent with the previous two
years. Promptly addressing customer complaints is also a focus.
Of the almost 20,800 complaints in 2020 (28,270 in 2019), 94.5%
were dealt with within 10 days and 99.8% within one month.1
Dulles Greenway has proactively addressed issues around
unpaid tolls, improving communications and waiving initial
administrative fees, where relevant. It is also working with
the Virginia Department of Transport Service Centre to match
licence plates against EZPass accounts, halving the number
of violation letters sent because either there is no transponder
in the vehicle or the system fails to register a reading.
Fair pricing and value
Our roads are essential transport routes for millions of people.
They offer improved safety, efficiency and comfort for a fair price.
We want customers to proactively choose to travel with us,
and we seek additional opportunities to support this. For
example, APRR’s Fulli service areas, launched in 2019, provide
competitive prices on the motorway, particularly for fuel.
On the Dulles Greenway, toll increases will enable further capital
investment, ensuring continued delivery of a safer, more efficient
and well-maintained alternative travel route for drivers.
Community contributions
Healthy, thriving communities are essential to our business –
as we are essential to them.
We make a direct positive economic contribution in the areas
we operate, both through taxes that we pay and our voluntary
community initiatives.
In France, over €1 million in healthcare worker tolls have been
reimbursed as part of APRR and AREA’s COVID-support offering.
In addition, APRR and AREA contributed around €180,000 in
support of flood emergencies, disadvantaged children and
families, and culture, sport and science. The long-standing
partnership with SPA (Société Protectrice des Animaux)
continued, providing financial assistance and awareness
raising campaigns to directly address the issue of abandoned
animals on rest areas on the motorways.
Warnow has provided a variety of COVID-19 related funding
support, including to a university hospital and in aid of the artist
community and a women’s shelter in Rostock. Almost €177,700
of non-revenue trips were made in 2020.
In 2020, Dulles Greenway paid US$3.6 million in property taxes,
reimbursed US$43,000 to healthcare workers, and waived
approximately US$800,000 in tolls for groups including school
buses, police and firemen. In support of communities, a new
Run the Greenway event is planned for May 2021. This replaces
the annual Drive for Charity event and seeks to better engage
communities, providing a different experience of the motorway
while fundraising for local causes.
Case study
CELEBRATING 25 YEARS
AT DULLES GREENWAY
2020 marked the 25th anniversary of Dulles Greenway.
The 14-mile roadway first opened to traffic on September
29, 1995, connecting Loudoun County to the rest of the
Washington Metropolitan Region.
The Greenway offered an innovative solution to construct
essential transportation infrastructure for which public
tax dollars were not available. Investors sought to
stimulate economic development in Loudoun County
while preserving its natural environment and beauty.
Over 25 years, the Dulles Greenway has continued to
connect commuters to their jobs; the community to
recreational venues; and families to each other by providing
a safe, predictable and faster transportation option.
25 YEAR
ANNIVERSARY
Priorities for 2021
− Continue the active stakeholder engagement program
developed with the new CEO at Dulles Greenway
− Implement improved customer payment options
at Warnow Tunnel
− Continued focus on innovation in our motorways, e.g. in
improving digital services and testing new technologies.
1 Approximately 90% of complaints are associated with tolls, where customer entry to the motorway has not been captured (e.g. due to loss of ticket or unread
electronic toll badges). The total number of complaints is equivalent to approximately one complaint for every 15,000 transactions. As at 30 November 2020.
ATLAS ARTERIA ANNUAL REPORT 2020 | 25
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS SUSTAINABILITY
OUR PEOPLE
Key achievements and delivery of the 2020 priorities
Our people are essential to our success.
Their hard work over the past year has
underpinned the delivery of our strategy
despite the challenges of COVID-19 and
associated lockdowns. We have continued
to support our people through these
challenges. We are committed to building
a team of diverse, passionate, driven and
innovative people, inspiring and readying
teams to deliver sustainable growth.
− 50% gender balance achieved across Boards,
senior management and corporate employees.
Our corporate team is split 47%/53% between
male and female employees
− Unconscious bias and inclusive leadership
training delivered to all corporate employees
and Board members
− New Talent Acquisition framework developed, improving
how we partner with recruiters to manage candidate
diversity and gender balance
− Supported remote working arrangements and provided
wellbeing support for employees in response to COVID-19
The 2020 year was a challenging one for everyone. Our
people – across our corporate offices and within the portfolio
businesses – have positively responded, moving us forward
with perseverance and a clear focus on achieving our strategic
goals. They have been dedicated in keeping each other and our
customers safe, and keeping our communities connected.
Supporting health and wellbeing
Mental health and wellbeing were of paramount concern
in 2020. COVID-19 resulted in additional personal and work
pressures. From the outset, we proactively worked to support
employees through the challenging times and changing
work environments.
At a corporate level we introduced a confidential employee
assistance and support service providing access to free
professional counselling sessions for any staff or family
members needing support. Optional wellbeing sessions were
also offered. Facilitated by experts, these addressed issues
identified by employees and provided practical tips for physical
and mental wellbeing.
‘Care’ and ‘Achievement’ packages were delivered during
lockdown periods to help boost morale. We are also exploring
ways to expand on flexible working options that cater to
individual differences.
Addressing challenges
Having commenced as a newly independent business in 2019,
in 2020 we have been building on these foundations to develop
and enhance our employee offering.
Our new Director of Talent and Development has focused
our People Strategy. Work has progressed to further develop
our inclusive culture and identify improvement initiatives
to address issues raised through our employee survey.
For example, we have:
− Established more regular meetings between corporate and
portfolio teams. These seek to improve communication
and address challenges associated with the geographically
dispersed nature of the organisation.
− Commenced leadership development sessions for managers.
− Identified coaching needs for individuals on key areas
of development.
− Conducted hosted workshops focused on improving
organisational efficiency and effectiveness. Recommendations
will form an action plan for 2021.
We have launched a learning platform to support employee
development and compliance. The initial modules (‘Atlas
Foundations’) focus on core policies including our Code
of Conduct, people-related policies and modern slavery.
Case study
COVID-19 SUPPORT
AT WARNOW
Our portfolio businesses have been proactive in their
response to COVID-19 and support for employees.
In Warnow Tunnel, a Crisis Team was proactively
implemented, with weekly staff and crisis meetings
to identify and address challenges.
In addition to the provision of safety elements (e.g.
procedural changes, installation of protective walls
to minimise contact, sanitiser, face masks and shields),
offerings have included paid leave for precautionary
absence, free flu vaccinations, home office installations
and an employee communication group to rapidly
disseminate information.
26 | ATLAS ARTERIA ANNUAL REPORT 2020
We will continue to build on these elements in the coming
year. The platform will also support individual development
planning for all employees, providing access to courses
to grow technical, professional and leadership skills.
Inclusion and diversity
We recognise inclusion and diversity as key drivers of success.
Getting this right promotes a positive culture and strengthens
the business through the contribution of different experiences
and views.
We were pleased to reach key milestones on our diversity
journey during 2020. We achieved our target of a 40% gender
balance at Board level, within senior management and across
the organisation. With our new Board member joining the
Australian Board in March 2021, our combined Australian
and Bermudian Boards have a balance of 50% male and
50% female membership overall on a non-executive basis.
We expanded upon our goal to roll out unconscious bias training
to all managers, delivering it to all corporate employees
and Board members. The course included work on inclusive
leadership development, which will be continued in 2021.
Case study
SUPPORTING
EMPLOYEES AT APRR
APRR takes great pride and responsibility in maintaining
an engaged and effective workforce. It has targeted
programs addressing diversity, employee development
and wellbeing, to name a few.
It has been recognised for its promotion of diversity and
equal opportunities through the award of the Diversity
Label from the Association Française de Normalisation.
Over 1,100 employees have now completed online training
focused on identifying and combatting prejudices and
preconceptions. APRR is expecting to train almost 3,200
people by the end of 2021.
Managers have been trained to promote wellbeing at work,
identify signs of distress and manage difficult situations.
APRR also has a network of mentors – supporting interns
and apprentices on their development journeys, while
gaining leadership and management skills themselves.
Finally, despite the challenges of COVID-19,
APRR successfully delivered around 46,300 hours
of training in 2020. This equates to an average
of 14 hours per employee.
We have developed a talent acquisition framework that will
provide a consistent approach to recruitment, removing potential
bias, driving an inclusive approach and ensuring that we promote
candidate diversity. As part of this, we are identifying relevant
metrics to capture and report on to assess its effectiveness.
We continue to build strong foundations for the business
as it grows. We regularly review and adapt our policies
and procedures to support a positive and inclusive culture.
Furthermore, we strive to better understand the employee
experience, particularly around inclusion and diversity,
and to foster a positive experience of these within the
organisational culture.
Human rights and modern slavery
Respecting human rights and eliminating modern slavery is
crucial to being a responsible business and to living our values.
We have undertaken a review of our exposure to human rights
and modern slavery risks and are now embedding a number of
processes to help identify and manage these risks in the future.
This includes embedding modern slavery and human rights
considerations into: supplier risk assessment reviews and audits;
supplier contractual clauses; investment due diligence; and
employee compliance training. We also provide an anonymous
Whistleblowing service and have introduced a Supplier Code
of Conduct, that sets out our expectations as to the standards
our suppliers must adopt in their own supply chains.
We are on track to voluntarily release a Modern Slavery
Statement in 2021, in line with the reporting requirements
set out in the Modern Slavery Act, 2018.
Priorities for 2021
− Maintain our 40% commitment to gender balance and look
for opportunities to improve proportional representation
across and within specific teams.
− Pursue a broader approach to candidate diversity that
challenges current assumptions around fit and better
explores diversity of perspective and experience.
− Invest in development for managers that includes a focus
on inclusive leadership and team effectiveness.
− Promote greater inclusion for employees as part of the return
to the workplace by exploring flexible approaches to work.
Corporate Team 1
Male
Female
% Male % Female
Board (Australian)
Board (Bermudian)
Boards (total)
Executive Team
Senior Management
Other employees
All employees
3
2
5
3
6
8
1
3
3 2
1
9
9
17
19
75%
40%
62%
75%
40%
47%
47%
25%
60%
38%
25%
60%
53%
53%
1 Excluding contractors
2 Debbie Goodin sits on both the Australian and Bermudian Boards
Portfolio business 1
Male
Female
Total
% Male
% Female
1 Excluding contractors
APRR
2,017
1,218
3,235
62%
38%
Dulles
Greenway
Warnow
Tunnel
10
4
14
71%
29%
11
26
37
30%
70%
ATLAS ARTERIA ANNUAL REPORT 2020 | 27
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS SUSTAINABILITY
ENVIRONMENTAL STEWARDSHIP
Key achievements and delivery of the 2020 priorities
Management of natural resources is a
commercial and social imperative as well
as an environmental one. Efficient use of
resources reduces costs; enabling nature
corridors supports the health of our
ecosystems; and responsible management
can help us to more effectively engage our
people, customers and communities.
− Expanded coverage of GHG emission reporting across
all of Atlas Arteria
− Dedicated lane for car poolers, taxis and ‘zero-emission’
vehicles opened on the A48
− Investing €46.5 million by 2022 on water protection
and restoration projects along APRR and AREA
− Continued implementation of 19 wildlife crossings
along APRR and AREA as part of the Motorway
Investment Plan
We focus on our three key impact areas: managing our
greenhouse gas emissions; enabling and educating customers in
minimising their impact; and protecting the natural environment.
Customer emissions
Customers’ use of our roads represents one of the largest
sources of GHG emissions associated with our activities.
Greenhouse gas emissions
In our 2019 Annual Report – the first under independent
management – we incorporated greenhouse gas (GHG)
emission reporting for our largest asset, APRR. During 2020,
we have worked to expand on this, and are pleased to be able
to present our GHG emissions across our entire portfolio and
head office.
With this baseline established, 2021 will focus on developing
targeted actions to manage and minimise emissions into
the future. For Warnow Tunnel we have already started the
process, shifting to a 100% renewable electricity tariff from
January 2021.
We have also taken steps to minimise energy use and cost
at Dulles Greenway with a move to a smaller office space that
is better suited to our employee base.
APRR progressively seeks to test and introduce new initiatives
for emissions reduction. We recently expanded our electric
vehicle fleet from 9 to 23 vehicles, with around 30 more to join
in 2021. We are phasing out our small sedan diesel fleet. The
introduction of electric vans is expected by 2023, as technology
further develops.
The A40 is also a site for the testing of a new asphalt product,
‘Biophalt’. This uses 40% recycled aggregates and replaces
petroleum-based bitumen with a plant-based binder, creating
a low-carbon alternative to conventional asphalts.
GHG emissions, tonnes CO2e 1
Scope 1
Scope 2
Scope 3 2
Total Gross
Emissions
6,541
5,942
6,027
5,525
293
1,244
2,135,936
2,143,721
957
773
2,212,963
2,219,862
2,230,582
2,237,382
756 1,855,310
1,861,591
887
33,361
34,542
2017 (APRR)
2018 (APRR)
2019 (APRR)
2020 (APRR)
2020 (Corporate,
Warnow Tunnel
and Greenway)
2020 total
5,818
1,643 1,888,672
1,896,133
1 GHG emissions are calculated based on the GHG Protocol’s equity share
approach. Atlas Arteria holds a 31.14% interest in APRR. In accordance with
this, data represents 31.14% of APRR’s calculated GHG emissions. Data for the
corporate offices, Warnow Tunnel and Dulles Greenway represents 100% of the
calculated GHG emissions.
2 Scope 3 data presented here is limited to customer traffic emissions.
28 | ATLAS ARTERIA ANNUAL REPORT 2020
Our ability to enable customers to reduce their footprint
is a priority for us, both to meet emerging customer demand
and to mitigate impacts.
The nature of our roads provides benefits compared to
standard roads: faster, more consistent driving speeds
and reduced congestion generally equates to reduced fuel
consumption and emissions.
In addition, we proactively seek opportunities to enable a
reduced customer footprint. For example, the new carpooling
lane on the A48 (see case study) and dedicated carpooling
carparks throughout APRR’s network encourage shared-use
of vehicles. By the end of 2020, there were 149 electric charging
points along APRR’s 2,318 kilometre network, including
92 very-high speed charging points.
This year was also the first of APRR’s partnership with the
STEER eco-mobility program (https://www.steer-ecomobilite.
fr/). Coordinated by the Ministère de la Transition Ecologique
et Solidaire, the program seeks to educate motorists on the
impacts of their travel choices and behaviours. APRR held
activities on rest areas of the A39, with additional locations
planned for 2021.
We continue to keep abreast of new technology so that
we can provide a timely response to developing needs
on our networks.
Protecting the natural environment
The extensive nature of motorways means that various
environments, habitats and wildlife corridors are at risk
of disturbance.
Amongst our portfolio businesses, the wider-spread potential
environmental impacts lie with APRR and AREA, with ongoing
infrastructure development activities across the 2,318 kilometre
network. As well as following the principles of ‘avoid, reduce,
offset’, a comprehensive program of works is undertaken
to address potential impacts. For example:
− Investing €46.5 million by 2022 to restore watercourses and
wetlands, treat runoff and implement water protection projects.
− Constructing 19 large wildlife crossings by 2023, at an
investment of €96 million. Investigations are also being
undertaken into best methods for wildlife corridor
construction, both to support animal populations and
to ensure cost-effectiveness so that more can be built.
− Partnering with the National Forestry Organisation (ONF)
to develop a vegetation management plan to address risks
of erosion. This includes selection of tree species to stabilise
the soils, support biodiversity and keep the roads safe.
− Employing conservation grazing, using sheep and goats to
maintain green areas in 11 motorway districts. This reduces
chemical use and improves employee safety.
− Managing approximately 8,800 tonnes of waste annually, 75%
of which is generated by users of the network. Standardisation
of waste collection units and customer awareness campaigns
seek to minimise volumes and facilitate recycling.
The Dulles Greenway Wetlands Mitigation Project represents
149 acres of wetlands, established to offset those affected
by the road construction. Now a haven for wildlife, Dulles
Greenway is currently working in partnership with the
American Eagle Foundation and Loudoun Wildlife Conservancy
to install an Eagle Camera in the region to enable monitoring
of nesting bald eagles.
We continue to pursue an improved salt management
framework at Dulles Greenway, to minimise the impact
on the surrounding environment. Due to be rolled out in
2020, challenges associated with COVID-19 have delayed
implementation. Consultations with contractors have begun
and procurement of winter services with improved equipment
will deliver a more efficient use of salt and brine from 2021.
Case study
JUGY, THE INNOVATION
LABORATORY
An ‘innovation laboratory’ continues at the Jugy rest
area, on the A6 for APRR and AREA. It provides grounds
for testing new technologies, the best of which can be
rolled out across the network.
Technologies include those improving ease of travel,
safety and environmental impact.
Examples include:
− Better resource management, with sensors to identify
water leaks and optimise waste collections.
− Designer Cy-Clope ashtrays that collect cigarette butts
for recycling into cement.
− Automatic lighting to enhance pedestrian safety.
− Real time information on available parking spaces,
visible from the deceleration ramp.
Case study
A48 CARPOOLING LANE
In September 2020, AREA became the first motorway
in France to offer a dedicated high-occupancy vehicle
lane. Reserved for carpoolers, taxis and ‘zero-emission’
vehicles, the 8km lane, at the entrance to Grenoble,
provides a more reliable travel time in heavy traffic. It seeks
to encourage the use of carpooling amongst customers
and therefore improve air quality around the city.
The project is the result of three years of work,
stakeholder engagement and testing. It has required
implementation of technology to count passengers
in fast-moving vehicles, and a new Highway Code sign
dedicated to carpool lanes in the form of a white diamond.
Climate change adaptation
We are aware of the potential impacts of climate change on our
assets and integrate risk assessments into our analysis of new
and existing investment opportunities.
As examples, we currently undertake modelling on Dulles
Greenway to assess the potential impacts of an increase in
extreme weather events on traffic flows. In France, we have
observed a reduction in traffic during heatwaves and recognise
that an increase in temperatures (and reduction in snowfall)
may impact ski-season traffic.
APRR has partnered with Egis on research assessing the
effects of climate change on infrastructure, specifically
looking at associated geotechnical risks and vulnerabilities.
This will inform the development of maintenance strategies
for different situations.
Over the next two years we plan to review our existing
work against the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations and determine next
steps towards TCFD reporting.
Priorities for 2021
− Consider options to manage and minimise GHG emissions.
− Roll out 14 additional high and very-high power electric
charging stations (excluding Fastned) along APRR and AREA,
providing over 94 additional charging points.
− Pursue enhanced biodiversity, preservation of natural
environments and improved water resource management
over the next three years at APRR.
ATLAS ARTERIA ANNUAL REPORT 2020 | 29
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS RISK MANAGEMENT
Risk Management Framework
The proactive and disciplined management of risk is critical
to Atlas Arteria’s business strategy and organisational
culture. The Company’s risk management framework sets
out its approach and direction in relation to risk management
and includes a risk management policy and risk appetite
statements that provide clarity as to the level of risk that the
business is willing to take in achieving its strategic objectives.
The risk management framework, policy and risk appetite
statements are reviewed annually by management and the
Boards to ensure the Company’s approach continues to be
sound and strikes the right balance between effective risk
management and the achievement of its strategic objectives.
Atlas Arteria has adopted the ‘Three Lines of Accountability’
model to support effective monitoring and oversight of risk
across our operations. This model is consistent with Atlas
Arteria’s objective to actively manage risk rather than eliminate
it, recognising that risk can present opportunities as well
as challenges.
The first line of the ‘Three Lines of Accountability’ risk
management model is the CEO and staff in each of the
corporate functions and underlying businesses. They are
charged with identifying, assessing, managing, monitoring
and mitigating risks in business processes. The second line of
accountability is the risk management and compliance function
responsible for, among other things, reviewing and challenging
the first line. The third line of accountability is the internal and
external audit functions. These roles are further described
in the risk management policy that can be found on the Atlas
Arteria website.
Role of the Boards in risk management
Risk management is a critical area of responsibility for the
Boards and a core component of its governance framework.
While ultimate responsibility for Atlas Arteria’s risk
management framework rests with the ATLAX and ATLIX
Boards, they have both established Audit and Risk Committees
(ARCs) to oversee the risk management framework and
ensure its ongoing effectiveness. The charters for the
ARCs are available on the Atlas Arteria website. As set out
in the Charters the ARCs are responsible for monitoring
and reviewing the effectiveness of the risk management
framework and internal controls and compliance with key risk
management policies, including the processes for identifying,
assessing and responding to risks in a manner consistent with
the risk appetite statements.
The Boards and ARCs receive regular reports on the key
financial and non-financial risks facing the organisation,
including an assessment of whether the risk is within appetite,
and the measures undertaken to manage the risk. The internal
and external audit functions also have direct lines of reporting
to the ARCs.
Risk management in practice
Atlas Arteria has identified key risks which it actively manages
as part of achieving its strategic objectives. These risks cover
all aspects of the business and are regularly reviewed and
monitored by management and the Board to ensure they
remain appropriate.
30 | ATLAS ARTERIA ANNUAL REPORT 2020
25 YEAR
ANNIVERSARY
Nature of Risk
Description
Management of Risk
Economic
and Market
Conditions
The business is exposed to higher and lower
economic activity across its underlying
operations. The impact of COVID-19 on traffic
volumes across our businesses in France,
Germany and the US brought this into
sharp focus.
Market conditions can affect Atlas Arteria’s
ability to achieve its long-term growth objectives.
Government
and Regulatory
Policies
Changes in government policy or regulations
could impact Atlas Arteria’s ability to achieve
its long-term strategic objectives.
Environmental,
Social and
Governance
Practices
In 2019 Atlas Arteria undertook a materiality
assessment to identify its key areas of focus for
environmental, social and governance practices.
Organisational
Capability
Technology
Financial
Structure
The corporate team at Atlas Arteria is lean but
it is important that at head office and at each
business there is sufficient depth, understanding
and expertise to effectively deliver on the
company’s strategy.
It is important that Atlas Arteria and its
underlying businesses have the right technology
systems in place to provide timely, accurate
and secure information and allow for efficient
operational processes that operate with
complete integrity.
Atlas Arteria and each of its businesses
needs to be appropriately structured to best
meet strategic objectives, support business
development, and provide appropriate returns
to securityholders.
Operational
Risk
Management
It is important that each business and their
operations are managed appropriately to
ensure the long-term sustainability of returns
through a balance of investment and cash
flow management.
− Ongoing monitoring and assessment of economic variables
and understanding how these impact traffic volumes and mix
as well as growth opportunities at each business.
− Ongoing assessment of economic outcomes and their impact
on financial results, access to capital and liquidity across
the business, including in periods of lower revenue, such
as occurred during the 2020 year.
− Assessment of traffic scenarios under various economic
and market conditions enables forward based planning.
− Management from Atlas Arteria and each business regularly
engage with various levels of government and regulatory
authorities across a wide range of forums in their respective
jurisdictions. This includes participation in relevant policy
discussions and education as to how our roads form effective
parts of the relevant transport networks.
− Atlas Arteria has prepared a Sustainability Report which
outlines material safety, environmental and social risks, how
Atlas Arteria intends to manage those risks and its material
safety, environmental and social priorities. The Report also
includes case studies of how Atlas Arteria is managing
sustainability risks.
− Atlas Arteria reviews and reassesses material ESG matters
on a regular basis including policy debates to ensure that the
strategy remains appropriate.
− Atlas Arteria is preparing targets relating to various aspects of
its sustainability framework in order to monitor progress and
success. Scenario assessment forms a key part of the strategy.
− Atlas Arteria has recently developed its talent attraction,
development and retention strategy.
− There are regular reviews of employee engagement and
culture, which are also considered by the Boards.
− Atlas Arteria and its underlying businesses undertake regular
reviews and assess technology suitability across key technology
platforms. This includes the security framework and protocols
and cyber risk assessments.
− Management undertakes regular scenario analysis to
understand the range of economic outcomes and the most
appropriate strategies to manage these.
− Management values the relationships with all suppliers
of capital and seeks to ensure they remain supportive
of the businesses and their practices.
− The equity raise during 2020 removed all corporate debt
which provides flexibility for growth, particularly in these
uncertain times.
− The management teams each employ a disciplined approach
to operations and maintenance to optimise business
performance and customer experience.
− Operational risk management arrangements including
contractual and legal frameworks are regularly reviewed
to ensure that the organisational needs are met.
− A risk policy framework guide, and internal reviews
support compliance with regulatory obligations and key
business processes.
ATLAS ARTERIA ANNUAL REPORT 2020 | 31
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS CORPORATE GOVERNANCE
Legal framework
Atlas Arteria comprises Atlas Arteria Limited (ACN 141 075 201)
(ATLAX), an Australian public company, and Atlas Arteria
International Limited (Registration No. 43828) (ATLIX), an
exempted mutual fund company incorporated in Bermuda.
Atlas Arteria is listed as a stapled structure on the Australian
Securities Exchange (ASX). The securities of ATLAX and ATLIX
are stapled and must trade and otherwise be dealt with together.
ATLAX and ATLIX have entered into a cooperation deed
which provides for sharing of information, adoption of
consistent accounting policies and coordination of reporting
to securityholders (Atlas Arteria Cooperation Deed).
Governance disclosures
We recommend that you also read the following documents
on the Atlas Arteria website:
− Overview of Legal Framework
− ATLIX Bye-Laws
− ATLAX Constitution
− Atlas Arteria Cooperation Deed
− ATLAX and ATLIX Board & Committee Charters
− Atlas Arteria Corporate Policies.
More detail about our operational and governance arrangements
can also be found in the ASIC Regulatory Guide 231 disclosure
on the Atlas Arteria website. This disclosure is required
by ASIC and seeks to improve disclosure for retail investors
in infrastructure entities.
For more information go to atlasarteria.com
Corporate Governance Statement
The Atlas Arteria Boards determine the corporate governance
arrangements for Atlas Arteria with regard to what they consider
to be in the long-term interests of the business and its investors,
and consistent with its responsibilities to other stakeholders.
Atlas Arteria’s corporate governance arrangements conform
to the Corporate Governance Principles and Recommendations
(4th edition) issued by the ASX Corporate Governance Council.
Atlas Arteria’s Corporate Governance Statement has been
approved by the Boards and outlines our main corporate
governance practices for the year ended 31 December 2020
and up to the date of issue of this 2020 Annual Report. Included
in the statement are details relating to:
− Board composition, skills matrix and performance;
− structure and Role of Board Committees;
− Director independence;
− diversity and inclusion;
− key governance documents including Vision and Values
Statement, Code of Conduct, Whistleblower Policy
and Anti-Bribery & Corruption Policy;
− external communications and market disclosures;
− risk management;
− auditor independence; and
− remuneration and securities trading restrictions.
Atlas Arteria’s Corporate Governance Statement, as well as
other governance documents referred to within the statement,
can be viewed on Atlas Arteria’s website at www.atlasarteria.
com/about. These governance documents are regularly
reviewed and updated to ensure that they remain consistent
with the objectives of the Boards.
For more information go to atlasarteria.com
32 | ATLAS ARTERIA ANNUAL REPORT 2020
BOARD OF DIRECTORS
1
4
7
2
5
8
3
6
ATLAX BOARD
1 Debbie Goodin
2 Graeme Bevans
3 David Bartholomew
4 Jean-Georges Malcor
ATLIX BOARD
5 Jeffrey Conyers
1 Debbie Goodin
6 Fiona Beck
7 Caroline Foulger
8 Andrew Cook
‘Integrity, collaboration and diversity of
thought and perspective are fundamental
to the operation of our Boards. It is through
these values that we build sustainable
cashflows and long-term value for
our securityholders.’
Debbie Goodin
‘Attracting and retaining a high quality,
passionate and committed team of global
executives has been a focus of the Boards.
This year, the calibre of our teams shone
through in their effective management
of the pandemic.’
Jeffrey Conyers
ATLAS ARTERIA ANNUAL REPORT 2020 | 33
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS CORPORATE GOVERNANCE
BOARD OF DIRECTORS
ATLAX BOARD
Debbie Goodin
BEc (AU), FCA
ATLAX Non-Executive,
Independent Chairman
ATLAX Nomination and Governance
Committee, Chairman
ATLIX Non-Executive,
Independent Director
Director of ATLAX from
1 September 2017, Director
of ATLIX from 1 November 2020
Age: 54
Graeme Bevans
ATLAX Executive Director
Director from 1 April 2019
following appointment as CEO
of Atlas Arteria
Age: 62
Debbie Goodin is currently Chairman of ATLAX and the ATLAX Nomination and Governance Committee
and is a Director of the ATLIX Board.
Debbie’s current non-executive directorships include Australian Pacific Airports Corporation Limited
and APA Group. For each of these boards she is the Chair of the Audit and Risk Committee, and also is a
member of various Remuneration and Health and Safety Committees.
In addition to her non-executive career, Debbie has deep experience in operations, finance, M&A and
corporate services. She has worked for over 20 years globally and in senior roles across both the public
and private sectors.
Debbie was formerly on the Boards of Senex Energy Limited, TEN Network Holdings, Ooh! Media, Beyond
Bank Australia, Citywest Water Corporation, Mount Hotham Resort Management Board, Doutta Galla Aged
Care Services and the Breast Cancer Network Australia. She has also served as a member of the Strategic
Finance and IT Committee for Royal Women’s Hospital.
Graeme Bevans is an Executive Director of ATLAX following his appointment as CEO.
Graeme has more than 25 years’ experience in the global infrastructure sector, where he has completed
the acquisition, development and management of 17 infrastructure businesses with a total enterprise
value of over $40 billion.
Prior to joining Atlas Arteria, Graeme was Founder and CEO of Annuity Infrastructure in the UK. He has
also held senior roles globally, including as Head of Infrastructure at CPPIB in Canada, Partner at Alinda
Capital Partners in the USA, and Head of Infrastructure Investment at IFM Investors in Australia.
Graeme has overseen very complex joint venture arrangements in global infrastructure both in Australia
and abroad, particularly in Europe and the Americas. He has served as an active Director of 10 of those
investee companies in Europe, Australia, North and South America.
David Bartholomew
BEc (Hons) (AU), MBA (AGSM)
ATLAX Non-Executive,
Independent Director
ATLAX People and Remuneration
Committee, Chairman
Director from 1 October 2018
Age: 60
David Bartholomew is a Non-Executive Independent Director and Chairman of the People and
Remuneration Committee of ATLAX. He also serves on the Boards of Endeavour Energy (the NSW
electricity distributor), Power & Water Corporation (the multi-utility owned by the NT Government),
and Keolis Downer (provides public transport operation and maintenance services in Australia). David is
also External Independent Chair of the Executive Price Review Steering Committee of AusNet Services.
David’s extensive management background includes the role of CEO of DUET Group, where he oversaw
the ASX listed company’s transition to a fully internalised management and governance structure. He also
held executive roles at Hastings Funds Management, Lend Lease, The Boston Consulting Group and BHP
Minerals. David has also served on the Boards of Interlink Roads (Sydney’s M5 Motorway) and Statewide
Roads (Sydney’s M4 Motorway) representing investors managed by Hasting Funds Management.
He is also a Director of The Helmsman Project, a not-for-profit organisation that provides coaching and
development programs for Year 9 students, predominantly in western Sydney.
Jean-Georges Malcor
Ecole Centrale de Paris (Eng),
MSc (Stanford)
ATLAX Non-Executive,
Independent Director
ATLAX Audit and Risk
Committee, Chairman
Director from 1 November 2018
Age: 64
Jean-Georges Malcor is an ATLAX Non-Executive Independent Director and Chairman of the ATLAX Audit
and Risk Committee. He is a Non-Executive Director on the Boards of ORTEC and Fives (a construction
and engineering company and global industrial engineering group respectively). He is also Chairman
of ENSTA Bretagne School of Engineering.
His executive experience includes eight years as CEO at CGG (EPA: CGG), a Euronext-listed French
geoscience company in the global oil and gas industry. Prior to this, he spent 25 years at Thales Group
(EPA: HO) in France and Australia. In 1999 Jean-Georges became the first Managing Director of ADI
(Australian Defence Industry). Jean-Georges has developed a high level of expertise in areas such as
organisation, corporate governance, risk mitigation, strategy, technology, financing and restructuring.
He is also an officer of the French Légion d’Honneur Order and National Order of Merit.
34 | ATLAS ARTERIA ANNUAL REPORT 2020
ATLIX BOARD
Jeffrey Conyers
BA (Toronto)
ATLIX Non-Executive,
Independent Chairman
ATLIX Nomination and Governance
Committee, Chairman
Bermuda-based Director since
establishment on 16 December 2009
Age: 67
Jeffrey Conyers is the Chairman of the Board of ATLIX and Chairman of the ATLIX Nomination and
Governance Committee. He is also a Director of numerous companies in Bermuda and is the former
Chief Executive Officer of First Bermuda Securities Limited, which provides advisory and execution
services on worldwide offshore mutual funds to individuals and local companies based in Bermuda.
Jeffrey began his professional career as a stockbroker in Toronto and returned to Bermuda in 1985 to join
the Bank of Bermuda, where his focus was investments and trusts. He is a Founding Executive Council
Member and Deputy Chairman of the Bermuda Stock Exchange.
Jeffrey has previously served on the Boards of MAp Airports International Limited and Intoll International
Limited, parts of the previously Macquarie-managed and ASX-listed vehicles MAp Group and Intoll
Group respectively.
Debbie Goodin
BEc (AU), FCA
ATLAX Non-Executive,
Independent Director
ATLAX Nomination and Governance
Committee, Chairman
ATLIX Non-Executive,
Independent Director
Director of ATLAX from
1 September 2017, Director
of ATLIX from 1 November 2020
Age: 54
Fiona Beck
BMS (Hons) Waikato (NZ) CA
ATLIX Non-Executive,
Independent Director
ATLIX People and Remuneration
Committee, Chairman
Bermuda-based Director
from 13 September 2019
Age: 55
See page 34 for full details.
Fiona Beck is a Non-Executive Independent Director of ATLIX as well as Chair of the ATLIX People and
Remuneration Committee, appointed in September 2019. She is also a Director of the Bermuda Business
Development Agency working in the technology space.
Fiona is a Director of Ocean Wilsons Holding Ltd, a Bermuda based investment company that operates as
a maritime services and port concessions company in Brazil. She is a Director of IBEX Ltd, a technology
based company utilising artificial intelligence. She is also a Director of Oakley Capital Investments Ltd,
a private equity firm with a portfolio of Technology investments, Education (with an online presence)
and a Consumer presence.
Fiona is a Chartered Accountant and her wealth of business and governance experience comes from
holding senior executive and governance positions in large infrastructure companies. She was the
President and CEO for 14 years of Southern Cross Cable Network, a submarine fibreoptic cable company
connecting New Zealand and Australia to the USA.
Her experience provides strategic insights particularly in technology, cyber security, data analysis, and
infrastructure asset management in a global environment.
Caroline Foulger
BA (Hons), University of London UK,
FCA (UK), CA (Bermuda)
ATLIX Non-Executive,
Independent Director
ATLIX Audit and Risk Committee,
Chairman
Bermuda-based Director
from 19 May 2020
Age: 59
Caroline Foulger is a Non-Executive Independent Director of ATLIX as well as Chair of the ATLIX Audit and
Risk Committee. Caroline currently serves as a Non-Executive Director and Chair of the Audit Committee
on Hiscox Ltd. She is also a Non-Executive Director, Chair at Catalina Holdings, a Non-Executive Director
and Chair of Oakley Capital Investments Limited and a Non-Executive Director of Ocean Wilsons Holding
Ltd, a Bermuda based investment company. Caroline has extensive board and executive experience in the
financial services sector with a particular focus on insurance and advisory services. She is a Chartered
Accountant having spent the bulk of her executive career with PwC where she was a partner for twelve
years (retiring in 2012), leading the insurance practice in Bermuda.
Caroline was the founding Chair of the Bermuda Business Development Agency. She also served in 2017
as a member of the Blue Ribbon Committee regarding the feasibility and financing of a new Bermuda Airport.
Caroline is a Member of the Institute of Directors in the UK and Bermuda.
Andrew Cook
BA (UWO)
CPA (Ontario)
ATLIX Non-Executive,
Independent Director
Bermuda-based Director
from 26 November 2020
Age: 58
Andrew Cook is a Non-Executive Independent Director of ATLIX. He currently serves as a Non-Executive
Director and Chair of the Board of OmegaCat Reinsurance Ltd. He is a Non-Executive Director and Chair
of the Compensation Committee at Global Partner Acquisition Group II. He is also a Non-Executive
Director of Aspida Re (Bermuda) Ltd.
Andrew has extensive executive, financial, operational and capital market experience. In his executive
career he was the founding CFO of several organisations, overseeing the development and growth of
accounting, finance, treasury and investor relations departments. He has extensive global M&A experience.
While serving as the President and CFO of Harbor Point he structured its merger with Alterra Capital.
Following the merger, he served as President of Alterra Bermuda prior to arranging its sale to the Markel
Corporation. He also has a proven track record of bringing private companies to the public markets having
lead successful IPO’s at LaSalle Re, Axis Capital and Global Partner Acquisition Corp.
Most recently Andrew was the Chief Executive Officer of GreyCastle Life Reinsurance, a Bermuda based
entity that participated in the life reinsurance run-off space. Andrew was also previously on the Boards
of Blue Capital Reinsurance Holding Limited and GreyCastle Life Reinsurance (SAC) Ltd.
ATLAS ARTERIA ANNUAL REPORT 2020 | 35
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS CORPORATE GOVERNANCE
BOARD OF DIRECTORS
The number of Board, and Board Committee, meetings held during the year and each Directors’ attendance at those meetings
are set out below:
Board
Audit and Risk
Committee
Nomination
and Governance
Committee
People and
Remuneration
Committee
Ad-Hoc
Committees (a)
Meetings
held
Meetings
attended
Meetings
held
Meetings
attended
Meetings
held
Meetings
attended
Meetings
held
Meetings
attended
Meetings
held
Meetings
attended
23
23
1
12
2
11
21
22
23
23
1
12
2
10
20
22
6
6
6
6
N/A
N/A
4
1
4
1
N/A
N/A
5
5
5
5
4
4
1
3
1
1
3
3
4
4
1
3
1
1
3
3
5
5
1
5
5
1
N/A
N/A
1
2
4
1
2
4
N/A
N/A
N/A
2
N/A
N/A
N/A
N/A
2
N/A
N/A
2
N/A
N/A
N/A
N/A
2
N/A
Board
Audit and Risk
Committee
Nomination
and Governance
Committee
People and
Remuneration
Committee
Ad-Hoc
Committees (a)
Meetings
Held
Meetings
attended
Meetings
held
Meetings
attended
Meetings
held
Meetings
attended
Meetings
held
Meetings
attended
Meetings
held
Meetings
attended
23
23
23
23
21
23
23
23
23
20
6
1
6
1
4
4
4
4
5
5
5
5
N/A
N/A
N/A
N/A
N/A
N/A
6
5
6
5
4
3
4
3
1
4
1
4
2
N/A
2
N/A
2
2
N/A
2
N/A
2
ATLIX Directors
Fiona Beck
Jeffrey Conyers
Andrew Cook (b)
Caroline Foulger (c)
Debra Goodin (d)
James Keyes (e)
Nora Scheinkestel (f)
Derek Stapley (g)
ATLAX Directors
Debra Goodin
David Bartholomew (h)
Graeme Bevans
Jean-Georges Malcor (i)
Nora Scheinkestel (j)
a) Adhoc Committee Meetings were held in relation to the capital raising in May/June 2020.
b) Andrew Cook appointed to the ATLIX Board, Nomination & Governance Committee and People & Remuneration Committee on 26 November 2020.
c) Caroline Foulger appointed to ATLIX Board, Audit & Risk Committee and Nomination & Governance Committee on 19 May 2020.
d) Debbie Goodin appointed to the ATLIX Board, Audit & Risk Committee, Nomination & Governance Committee and People & Remuneration Committee on 1 November 2020.
e) James Keyes retired from ATLIX on 19 May 2020.
f) Nora Scheinkestel retired from ATLIX on 1 November 2020.
g) Derek Stapley retired from ATLIX on 26 November 2020.
h) David Bartholomew appointed to the ATLAX Audit & Risk Committee on 1 November 2020.
i) Jean-Georges Malcor appointed to the ATLAX People & Remuneration Committee on 1 November 2020.
j) Nora Scheinkestel retired from ATLAX on 1 November 2020.
36 | ATLAS ARTERIA ANNUAL REPORT 2020
FINANCIAL OVERVIEW
Financial Highlights
Statutory results
Atlas Arteria consolidates both Dulles Greenway and Warnow Tunnel and equity accounts for its investment in APRR and ADELAC.
Accordingly, the results for the period at Dulles Greenway and Warnow Tunnel are also consolidated in full into Atlas Arteria’s
income statement while the results for APRR and ADELAC are disclosed in the ‘share of net profits/(losses) in associates’ line
item. The balance sheet for the Dulles Greenway and Warnow Tunnel are consolidated into Atlas Arteria’s balance sheet while
the investment in APRR and ADELAC is disclosed in the ‘Investments in associates’ line item. Combined with the corporate level
expense, these make up the Atlas Arteria statutory results for the period.
Included within the statutory results are a number of ‘Notable Items’ that are either not expected to recur, or are not related
to operational performance.
Revenue and other income
− Toll Revenue
− Other income
Operating expenses
− Business operations
− Corporate costs
− Macquarie management fees
Finance costs
Depreciation and amortisation
Share of net profits/(losses) in associates
Income tax (expense)/benefit
Net Profit/(loss) from operations after tax (excluding Notable Items)
Notable Items
− Transition costs to internalise management
− Macquarie management fees
− FX impacts of significant transactions during period (non-cash)
− Impairments and asset revaluations
− Hedge ineffectiveness of the swap for the APRR Transaction
− Income tax benefit/(expense) of notable items
Net (loss)/profit from operations after tax
ALX
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
% change
95,253
11,397
150,368
24,824
(43,420)
(22,339)
–
(51,974)
(18,562)
(7,488)
(101,302)
(107,017)
(67,439)
196,086
1,346
69,582
–
(2,051)
13,797
(70,283)
254,874
3,485
178,227
(2,297)
(20,748)
–
(143,896)
(165,429)
420
6,343
(55,805)
(5,294)
5,720
(9,821)
(37%)
(54%)
16%
(20%)
–
5%
4%
(23%)
(61%)
(61%)
–
90%
–
13%
108%
11%
(468%)
Given the decline in traffic at the Dulles Greenway, and uncertainty around how the U.S. economy would recover as a result of the
COVID-19 pandemic, the Boards of ATLIX and ATLAX determined there was a need to further impair their respective investments
in Dulles Greenway during the year by a total of $143.9 million (US$100.0 million), (2019: $165.4 million (US$115.0 million)). This
is a ‘Notable Item’ and was the primary driver behind the statutory loss for the 2020 year of $55.8 million (2019: loss of $9.8 million).
The final management fees paid to the Macquarie Group in 2020 were $2.1 million (€1.2 million) (2019: $28.2 million included
the fees paid prior to the termination of the Atlas Arteria Management and Advisory Agreements on 15 May 2019).
Excluding Notable Items, net profits decreased by $108.6 million to $69.6 million. This result reflects the impact of the movement
restrictions implemented by governments in Atlas Arteria’s jurisdictions to manage the COVID-19 pandemic.
Other items that impacted performance from a corporate perspective included the repayment of the €350.0 million corporate debt
facility in June 2020, which reduced finance costs by $5.7 million. Atlas Arteria also operated with a fully internalised management
for the full 2020 year, which saw corporate costs increase from $18.6 million in 2019 to $22.3 million in 2020.
ATLAS ARTERIA ANNUAL REPORT 2020 | 37
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS FINANCIAL OVERVIEW
Cashflows
Atlas Arteria received two distributions from APRR during 2020, being $206.8 million (€126.4 million) in March based on the
second half 2019 year performance, and $104.1 million (€64.2 million) in September, reflecting the first half performance for 2020.
Currently distributions from APRR are the primary source of cash for Atlas Arteria, and these cashflows, together with cash on the
Atlas Arteria balance sheet, fund corporate costs and distributions to Atlas Arteria securityholders.
In the context of uncertainty around COVID-19, the final 2019 distribution to Atlas Arteria securityholders was cancelled and
cash relating to this distribution, together with the proceeds from the placement in May, were used to repay Atlas Arteria’s only
remaining holding company debt facility totalling $571.3 million (€350 million). Atlas Arteria is now positioned with a more flexible
balance sheet to pursue near term growth opportunities as they arise.
The first half distribution for 2020 consisting of an ordinary dividend of 11.0 cps was paid in full by ATLIX on 5 October 2020.
After the distribution paid in October, and operational activities for the year, the corporate balance sheet held $193.7 million
in cash as at 31 December 2020.
Business Operations
A summary of the underlying results for each business is shown in the table below.
Business
APRR
ADELAC
Dulles Greenway
Warnow Tunnel
Atlas Arteria weighted average1
Revenue
Contribution to
Atlas Arteria
Performance for 2020 vs 2019
Total Traffic
Toll Revenue
(local currency)
90%
2%
6%
2%
(21.0%)
(28.6%)
(42.7%)
(7.7%)
(22.8%)
(17.1%)
(27.0%)
(42.3%)
(6.5%)
(19.3%)
1 Weighted averages are based on portfolio revenue allocations from Atlas Arteria’s beneficial interests in its businesses in A$ using the average foreign currency
exchange rates in the current period (AUD/USD 0.6949 and AUD/E U R 0.6055).
The proportionate results, and weighted average results, aggregate the financial results of each of Atlas Arteria’s businesses
according to its economic interests from ongoing operations.
APRR Group
APRR 100% (€m)
Toll revenue
Other revenue
IFRIC 12 adjustment
Total revenue
Purchases and external charges
Personnel costs
Taxes
IFRIC 12 adjustment
Other
Total operating expenses
Total EBITDA
Total EBITDA (proportional, A$m)
Provisions
Net interest expense
Depreciation and amortisation
APRR corporate income tax
Share of profit/(loss) of associates (incl ADELAC)
Other
Consolidated NPAT
2020
2019
% change
2,100.4
2,534.5
68.8
345.6
76.5
405.0
2,514.8
3,015.9
(114.4)
(199.6)
(309.0)
(345.6)
3.3
(115.1)
(206.9)
(353.4)
(405.0)
6.5
(965.5)
(1,073.9)
1,549.5
797.0
(56.9)
(98.5)
(454.0)
(310.1)
0.1
(1.8)
628.3
1,942.0
998.9
(63.9)
(118.2)
(432.7)
(458.2)
0.4
5.2
874.7
(17.1%)
(10.0%)
(14.7%)
(16.6%)
0.6%
3.5%
12.6%
14.7%
(48.8%)
10.1%
(20.2%)
(20.2%)
11.0%
16.7%
(4.9%)
32.3%
(82.8%)
(135.4%)
(28.2%)
Traffic during January and February was strong relative to the prior year with a good ski season and the additional day in February.
With lockdown measures implemented in France from the middle of March and again at the start of November, traffic numbers
at APRR were down 21.0% for the year. Traffic rebounded strongly following the easing of movement restrictions from 11 May before
softening once again in mid-October following the onset of the second wave of COVID-19 and subsequent restrictions in France.
38 | ATLAS ARTERIA ANNUAL REPORT 2020
Heavy vehicle traffic was less affected by the imposition of lockdown measures than light vehicles, falling by 14.1% during H1 2020
and only 2.7% for H2 2020 versus the same periods in 2019. Traffic was impacted by reductions in manufacturing production during
lockdown periods in the first half of the year, however, the transformation of French industry to be able to operate in a COVID-19
safe manner allowed the continuation of business activity throughout the second half of the year despite lockdown restrictions.
Tariffs for heavy vehicles are approximately three times higher than those for light vehicles and the relative strength of heavy
vehicle traffic supported revenue. Total toll revenue for 2020 was €2.1 billion (2019: €2.5 billion) which comprised 61% from light
vehicle traffic and 39% from heavy vehicle traffic (2019: 66% light vehicle and 34% heavy vehicle).
Light vehicle/Heavy vehicle Traffic and Revenue Split
t
i
l
p
S
c
i
f
f
a
r
T
t
i
l
p
s
e
u
n
e
v
e
R
)
y
c
n
e
r
r
u
c
l
a
c
o
l
(
2020
2019
2020
2019
82%
84%
61%
66%
0%
20%
40%
60%
18%
16%
Light vehicle
Heavy vehicle
39%
34%
80%
100%
Operating costs (ex IFRIC 12 adjustment) for APRR reduced by 7.4% as a result of the lower traffic impacting variable taxes and
employee profit sharing costs and lower maintenance costs with milder winter conditions at the start of the year. Variable taxes
are calculated on the basis of vehicle kilometres travelled and APRR earnings and, as a result of lower traffic, these taxes reduced
by c.€ 4 4 million.
2020 Operating costs
2019 Operating costs
18%
17%
49%
52%
32%
Purchases and external charges
Personnel costs
30%
Taxes
Other
Application of AASB Interpretation 12 Service Concession Agreements (‘IFRIC 12’) relating to capital spend during the year saw
revenue of €345.6 million (2019: €405.0 million) offset by a corresponding expense.
Excluding the impact of IFRIC 12, EBITDA margins have progressively improved since 2015 with 2020 being an exception given
the impact of COVID-19 movement restrictions on traffic.
ATLAS ARTERIA ANNUAL REPORT 2020 | 39
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS
FINANCIAL OVERVIEW
APRR EBITDA margins (excluding IFRIC 12)
90%
85%
80%
75%
70%
Including operating taxes
Excluding operating taxes
2015
2016
2017
2018
2019
2020
Net interest expense at APRR reduced by 16.7% driven by lower interest rates on new Eurobonds issued during the year and
negative yields on commercial paper.
During the year, APRR issued $2,477 million (€1,500 million) of Eurobonds and $1,521 million (€921 million) of commercial paper,
the proceeds of which were used to repay commercial paper maturities and general corporate purposes. This demonstrates
the continued support by the financial markets for the APRR business. During the year, both S&P and Fitch re-affirmed their
A- long-term issuer ratings for APRR, and reflecting the strength of the APRR balance sheet, maintained their outlook as
‘stable’. In October, Fitch also increased its short-term rating from F2 to F1 despite the COVID-19 traffic disruption.
As at year end, APRR had €1 , 1 2 0 million in cash on the balance sheet with a €2.0 billion undrawn revolving credit facility.
Warnow Tunnel
Warnow Tunnel 100%
Toll revenue
Other revenue
Total revenue
Total operating expenses
Total EBITDA
€m
A$m
2020
12.7
0.1
12.8
(3.7)
9.1
2019
13.6
0.1
13.7
(3.4)
10.3
% change
(6.5%)
(5.7%)
(6.3%)
(9.8%)
(11.6%)
2020
21.0
0.2
21.2
(6.1)
15.1
2019
21.9
0.2
22.1
(5.4)
16.7
% change
(3.9%)
(3.3%)
(3.9%)
(13.7%)
(9.6%)
The performance of the Warnow Tunnel was relatively strong throughout the year, with traffic only 7.7% lower and revenue
6.3% in Euros lower than 2019. This reflects both the benefit from disruption caused by new roadworks on competing routes that
began late in Q4 2019 and the low COVID-19 case numbers recorded in the state in which Warnow Tunnel is located which allowed
a relatively rapid easing of social restrictions and the resumption of regional tourism.
Traffic returned to growth in the third quarter of 2020, further supported by continuing roadworks on competing routes. In
November Germany implemented a second round of movement restrictions, but some business activities, schools, shops and
workplaces remained open. However, on 16 December 2020 Germany entered a hard lockdown with all shops except for essential
services and some school year levels closed.
Costs at Warnow Tunnel remained reasonably consistent with those in 2019, with reduced variable costs as a result of lower traffic
offset by an increase in the scheduled maintenance activity during the year.
As of 31 December 2020, Warnow Tunnel had $8.4 million (€5.3 million) cash on the balance sheet, $10.4 million (€ 6 . 5 million)
in net assets.
40 | ATLAS ARTERIA ANNUAL REPORT 2020
Dulles Greenway
Dulles Greenway
Toll revenue
Other revenue
IFRIC 12 adjustment
Total revenue
Transaction fees
Operating and maintenance expenses
Other operating expenses
IFRIC 12 adjustment
Total operating expenses
Total EBITDA
2020
51.6
0.4
5.8
57.8
(1.8)
(6.8)
(5.0)
(5.8)
(19.4)
38.4
US$m
2019
% change
89.3
0.4
11.5
101.2
(3.1)
(7.7)
(5.2)
(11.5)
(27.5)
73.7
(42.3%)
(2.7%)
(50.0%)
(43.0%)
42.5%
12.5%
2.9%
50.0%
29.7%
(47.9%)
2020
74.2
0.6
8.3
83.1
(2.5)
(9.8)
(7.3)
(8.3)
(27.9)
55.2
A$m
2019
% change
128.5
0.6
16.6
145.7
(4.4)
(11.1)
(7.5)
(16.6)
(39.6)
106.1
(42.3%)
(2.7%)
(50.0%)
(42.9%)
42.5%
12.4%
2.9%
50.0%
29.7%
(47.9%)
The Dulles Greenway in Northern Virginia was significantly impacted by COVID-19 lockdown measures given the high proportion
of commuter-based traffic serviced by that road. Movement restrictions were in place from 12 March through to 1 July 2020 with
new mitigation measures to reduce the spread of COVID-19 announced by the Governor of Virginia in November 2020.
Remote learning was a feature for most of the 2020 year post 12 March as were teleworking arrangements. Customers continue
to find value in using the Greenway on weekends, resulting in a stronger recovery in weekend traffic than weekday traffic. During
the second half, average weekend traffic was down 26% on the prior year, while weekday traffic was down 45%.
Operating and maintenance costs reduced by 12.5% as a result of a number of factors including the removal of cash tolling
and lower maintenance costs required to manage milder snow conditions earlier in the year. The renegotiated agreement with
the Virginia State Police came into effect on 1 January 2020, better aligning police activity to traffic volumes, the full benefit of
which was a saving of $0.5 million (US$0.3 million) for the year. Reductions to property tax rates became effective from July 2020
decreasing operating costs by $0.8 million (US$0.6 million).
IFRIC 12 applied to completion of the DTR Connector and the West End Works completed during the year which saw revenue
of $8.3 million (2019: $16.6 million) offset by a corresponding Business Operation expenses.
2020 operating costs
(based on US$ costs)
2019 operating costs
(based on US$ costs)
12%
13%
10%
19%
26%
24%
26%
25%
23%
Transaction fees
O&M
Administrative expenses
22%
Property taxes
Other
As of 31 December 2020, Dulles Greenway had $282.3 million (US$216.3 million) cash on the balance sheet, $744.7 million
(US$570.5 million) in net assets. As previously disclosed, failure to pass the lock-up tests as defined under the debt covenants for
this business means that around US$77 million that would otherwise be available for distribution to Atlas Arteria remains included
as part of the cash reserves.
ATLAS ARTERIA ANNUAL REPORT 2020 | 41
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS REMUNERATION REPORT AUDITED
MESSAGE FROM THE PEOPLE AND REMUNERATION COMMITTEE CHAIRS
On behalf of the ATLAX and ATLIX People and Remuneration
Committees (PRCs) and Boards, we are pleased to present the
Remuneration Report for the 2020 financial year. This report
contains detailed information regarding the remuneration
arrangements for the Directors and Senior Executives who
were Key Management Personnel (KMP) for Atlas Arteria
during the year.
This year, given the impact of COVID-19 on business performance
and the ongoing disruption associated with the pandemic,
our approach to remuneration has been to take into account
not only the impact of the pandemic, but also to ensure we
continue to attract talent and incentivise future performance.
While traffic on our roads was significantly affected by
COVID-19 related movement restrictions, our people moved
quickly to respond and worked effectively to maintain
uninterrupted operations in a rapidly changing environment.
Our priority has been to continue operations and ensure
the safety and wellbeing of our employees, contractors,
suppliers, customers and the local communities we serve.
We have a clear strategy to focus on sustainable cash flows
for securityholders and long-term value creation. During the
year we undertook and actively pursued activities to achieve
these objectives, which have been outlined in the Strategic
Framework section on pages 10-11.
We sought to mitigate the impact of the pandemic with
disciplined capital management. The final 2019 distribution
was cancelled and cash relating to this distribution, together
with the proceeds from the equity raise were used to repay the
only remaining holding company debt facility within the Atlas
Arteria structure. This means Atlas Arteria enjoys a strong
liquidity position with improved flexibility to pursue intrinsic
growth opportunities.
Other significant achievements during the year included:
− We completed a complex process to open up the US market
as a future source of capital with completion of a Security Sale
Facility which removed all US based retail investors from the
Atlas Arteria share register. This will provide access to new
capital for future growth and will benefit all securityholders.
− We completed the transition from an externally managed
organisation to an independent internal management team
that is actively managing our businesses. Completion of the
APRR Transaction saw all management agreements with the
Macquarie Group terminated, other than short term transition
arrangements which expired in the second half of the year.
We are now operating as a truly independent organisation.
− We have a high-quality corporate team in place with strong
executive management, negotiation, data management and
forecasting capability to support operations teams.
42 | ATLAS ARTERIA ANNUAL REPORT 2020
− We have implemented our People Strategy to support growth,
development, diversity and inclusion in our team. Consistent
with our values, we continued to embed a safety-first culture
at both the corporate level and at our underlying businesses.
The first half distribution for 2020 of 11.0 cps was paid in full by
ATLIX on 5 October 2020 and reflected the strong and resilient
operational performance of APRR in the first half of the year.
Following the performance of the APRR business in H2 2020,
we are pleased to provide distribution guidance of 13 cents per
security. The distribution guidance reflects the business
cashflows that Atlas Arteria expects to receive from APRR
as a result of its financial performance in H2 2020.
The distribution remains subject to continued business
performance (particularly in light of COVID-19), movements
in foreign exchange rates, and other future events.
FY2020 remuneration outcomes
Atlas Arteria’s remuneration framework aims to ensure
executive remuneration is aligned both with the performance
of the business and the interests of securityholders. This year,
given the impact of COVID-19 on business performance, the
Boards carefully considered whether it was appropriate to
exercise discretion to change the performance measures or
thresholds for incentive payments, and whether to exercise
discretion as to the final payments to be made.
The Boards had regard to the fact that, due to the impact
of COVID-19, none of the thresholds for incentive payments
against financial targets were achieved with the exception
of the management of corporate costs. The Boards also
considered the efforts of the management team to safely
maintain operations and continue to deliver on strategic
outcomes which will support long-term securityholder value.
On balance, the Boards concluded that Atlas Arteria’s STI
performance targets for FY2020 remained appropriate. However,
they exercised discretion to deliver the STI awards entirely in
restricted securities, with no cash STI awards made to KMP
Executives. In doing so, the Boards sought to uphold Atlas
Arteria’s consistent focus on ensuring a strong balance sheet
and liquidity, while also acknowledging the significant impact
of the pandemic on our stakeholders and their expectations.
The fixed pay for senior executives was established in 2018 prior
to the internalisation of management and reflected the scale and
complexity of the business at the time. As previously advised,
in late 2019 the Boards commenced a review of fixed pay to
ensure remuneration remained market competitive. This review
found that some remuneration levels were materially below
competitive benchmarks and not consistent with our strategy to
attract and retain a high performing executive team. Accordingly,
adjustments were made during the year to the fixed pay of the
MD & CEO and CFO to better reflect market benchmarks.
Remuneration governance
The PRCs are actively involved in ensuring our remuneration
policies reflect Atlas Arteria’s values and behaviours and
encourage appropriate behaviours and actions which are
aligned with Atlas Arteria’s business strategy, performance
and securityholders. Specifically, the PRCs seek to ensure
management behaviours are consistent with the creation
of value for securityholders, our commitment to diversity
and inclusion, and our focus on customers and communities.
Activities undertaken by the PRC during the year were focused
on enhancing our formal, rigorous and transparent HR and
remuneration framework, including developing guidelines
for the exercise of discretion over variable pay decisions.
At the commencement of the financial year, the Boards set the
KPIs for the MD & CEO, and the MD & CEO in consultation with
the Boards set the KPIs for each of the KMP Executives. The
PRCs provide regular informal feedback on performance to the
MD & CEO and KMP Executives throughout the year. At the end
of the financial year, the MD & CEO and each of the executive
team have their performance assessed against these KPI’s
and other relevant matters. The formal performance review
process has been completed for the FY2020 year, and more
information in relation to the outcomes of the process for the
KMP Executives can be found at section 6.2 below.
We trust you, our securityholders, find the 2020 Remuneration
Report provides clear and informative insights into our
executive remuneration policies, practices and outcomes.
David Bartholomew
Fiona Beck
Atlas Arteria Limited
Atlas Arteria International Limited
People & Remuneration
Committee Chair
People & Remuneration
Committee Chair
The value of awards under the FY2020 STI and LTI Plans will be
based on the fixed pay levels that applied on 1 January 2020.
Further information on the fixed pay review is included in the
Remuneration Report at section 6.1.
Enhancements to remuneration structure
and disclosures
The Boards are always looking for opportunities to improve
and evolve the Company’s approach to remuneration so
that it remains appropriate to the business, aligned to
securityholders’ interests, and consistent with contemporary
practices. We take investor feedback seriously and we will
continue to engage with investors and their advisors in relation
to remuneration.
As disclosed in the 2019 Report, following a review of the Long
Term Incentive Plan (LTIP), changes were introduced to the
LTIP for FY2020 and subsequent awards. The review concluded
that the use of relative Total Security Return (TSR) as the
sole performance hurdle continues to be appropriate. This is
further supported by the challenges to setting targets for other
measures posed by COVID-19. Given the location of the Groups’
businesses and its business strategy, for future LTIP awards,
commencing with the 2020 Award, the Boards adopted a new
comparator group of over 100 OECD-domiciled companies
in the Global Listed Infrastructure Organisation (GLIO) group
as a more relevant basis for assessing performance.
The following changes have been introduced for FY2021:
− There will be no increase to the fixed pay for the MD & CEO
and the CFO for FY2021.
− NED fees will not increase for FY2021.
− A positive TSR hurdle is being introduced for the FY2021 LTI
Award which will apply in addition to the existing relative TSR
test. Thus, irrespective of the relative TSR performance, no
awards under the FY2021 LTIP will vest unless the absolute
TSR over the performance period has been positive.
− Securityholder approval for the actual awards of restricted
securities under the STI Plan to the MD & CEO will in future
be sought on a retrospective basis. This is a change from
current practice where approval has been obtained in advance
for a maximum number of awards with the final number
to be awarded to be determined by the Board.
Enhanced disclosure of STI outcomes incorporating
retrospective disclosure of targets and performance against
those targets has also been adopted for the FY2020 Report
in response to investor feedback.
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This Remuneration Report contains the following sections:
1 Introduction
2 Who is covered by this report?
3 Overview of the remuneration framework
4 FY2020 business performance highlights
5 Remuneration framework
6 FY2020 Remuneration outcomes
7 Non-Executive Director fees
8 Remuneration governance
9 Statutory disclosures
Introduction
1.
The Directors of the Groups present the Remuneration Report prepared in accordance with section 300A of the Corporations
Act 2001 for the Groups and the consolidated entity for the year ended 31 December 2020. The information provided in this
Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001. This Remuneration Report
forms part of the Directors’ Reports.
2. Who is covered by this report?
This Remuneration Report outlines the remuneration framework and outcomes for the ATLAX Group and Atlas Arteria Key
Management Personnel (‘KMP’). The obligation under the Corporations Act to provide a remuneration report only applies to ATLAX
as an Australian listed Group. However, given the stapled security holding structure, the Boards and PRCs of both ATLAX and
ATLIX have worked together on the Remuneration Report with the disclosures extended to cover all of the Atlas Arteria KMP.
For the purposes of this report, KMP are those persons having authority and responsibility for planning, directing and controlling
the major activities of the Groups.
The individuals covered by this Remuneration Report are:
Name
Role
Date of appointment
Management
Graeme Bevans
Nadine Lennie
Managing Director & Chief Executive Officer
Chief Financial Officer
Vincent Portal – Barrault
Chief Operating Officer
1 April 2019
1 April 2019
1 April 2019
Non-Executive Directors
Debbie Goodin
David Bartholomew
Jean-Georges Malcor
Independent Non-Executive Chairman (ATLAX)
and Independent Non-Executive Director (ATLIX)
1 November 2020 as Chairman of ATLAX (Director of
ATLAX from 1 September 2017) and Director of ATLIX
from 1 November 2020
Independent Non-Executive Director (ATLAX)
PRC Chair
1 October 2018
Independent Non-Executive Director (ATLAX)
Audit and Risk Committee (ARC) Chair
1 November 2018
ARC Chair with effect from 1 November 2020
Nora Scheinkestel
Independent Non-Executive Chairman (ATLAX)
and Independent Non-Executive Director (ATLIX)
17 April 2015 as Chairman of ATLAX (Director of ATLAX
from 28 August 2014); and ATLIX Director from
17 April 2015 (Retired from ATLAX and ATLIX with
effect from 1 November 2020)
Jeffrey Conyers
Fiona Beck
Andrew Cook
Caroline Foulger
Derek Stapley
James Keyes
Independent Non-Executive Chairman (ATLIX)
16 December 2009
Independent Non-Executive Director (ATLIX)
PRC Chair
13 September 2019
PRC Chair with effect from 19 May 2020
Independent Non-Executive Director (ATLIX)
25 November 2020
Independent Non-Executive Director (ATLIX)
Audit and Risk Committee (ARC) Chair
19 May 2020
ARC Chair with effect from 21 September 2020
Independent Non-Executive Director (ATLIX)
1 June 2010 (Retired with effect from 25 November 2020)
Independent Non-Executive Director (ATLIX)
21 February 2013 (Retired with effect from 19 May 2020)
44 | ATLAS ARTERIA ANNUAL REPORT 2020
3. Overview of the remuneration framework
Included below is a summary of the remuneration framework for the management team. Further details regarding our
remuneration arrangements are provided in the remainder of this Remuneration Report.
Remuneration Framework Overview
Remuneration
Principles
Remuneration
elements
− Simple
− Balance short and
long-term needs
Fixed Remuneration
− Salary and superannuation
− Reviewed annually against
comparator benchmarks
− Reflect role complexity
− Reflect our values and behaviours
Short Term Incentive
− Annual incentive normally
delivered 50% in cash and
50% in restricted securities
− For FY2020, in view of the impact
of COVID-19 100% delivered
in restricted securities
To align the interests of
securityholders, executives and
other participants as determined
by the Boards
− Specific and differentiated
performance outcomes
− Securityholder alignment
Long Term Incentive
− Annual award of performance
rights with a 3 year
performance period
Rewards long-term value creation
for securityholders
Vesting based on achieving
challenging performance targets
Executive remuneration levels
should be competitive with
companies of similar size
and complexity
Recognises the market value of
an individual’s skills, experience,
accountability and their contribution
in delivering the requirements
of their roles
A combination of financial
measures and non-financial
measures relating to specific
business outcomes and taking
account of behaviours and conduct
An individual’s skills, experience,
accountability and contribution
in delivering the requirements
of their roles
Assessment of performance against
a balanced scorecard of financial
measures (weighted 70%) and
non-financial measures (weighted
30%) linked to key financial and
business objectives
Relative Total Securityholder Return
compared to a comparator group
of local and international
infrastructure companies
A positive TSR gateway applies for FY21
Measures are set to reward delivery
of returns and value creation for
securityholders
Measures are set to reward delivery
of returns and value creation for
securityholders
Measures performance against
local and international
infrastructure companies
Minimum Security holding
requirements to be accumulated
within five years
STI deferral to restricted securities Measures aligned to creation of value
for securityholders
Ability to exercise discretion as required over remuneration decisions to ensure that:
− Remuneration outcomes reflect the performance of the Groups and the individual executives; and
− Are consistent with securityholder expectations
All variable remuneration is subject to Malus adjustment
Purpose
How aligned to
performance
Performance
measures
Performance
targets
Alignment to
securityholders
Governance
What remuneration principles guide the design of the remuneration framework?
The following six principles underpin the management of the remuneration framework at Atlas Arteria. The principles provide
guidance on how remuneration decisions are made and how remuneration outcomes are determined.
The executive remuneration framework should be: Description
1. Simple
Be simple to understand, implement and communicate
2. Balance short and long-term needs
Support the delivery of the annual business plans, whilst also reflecting the
long-term needs of the business
3. Reflect role complexity
4. Reflect our values and behaviours
5. Specific and differentiated
performance outcomes
6. Securityholder alignment
Reflect the experience of the executive, complexity/nature of the role and the business
compared to the market
Encourage appropriate behaviours and actions which are aligned to Atlas Arteria’s
business strategy, performance and securityholders
Reflect specific performance measures which executives have the ability to influence,
and allow for differentiation of executive incentive outcomes
Encourage executive equity ownership so that executives have ‘skin in the game’,
aligning executives to securityholder returns
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What changes have been made to the remuneration structure during FY2020 and why?
Key changes to the remuneration framework to enhance the alignment between executives and securityholders introduced during
FY2020 include:
− STI awards for FY2020 will be delivered entirely in restricted securities with no STI payable to KMP Executives in cash.
− There will be a fixed pay freeze for the MD & CEO and the CFO for FY2021.
− NED fees will not increase for FY2021.
− A positive TSR hurdle is being introduced for the FY2021 LTI Award which will apply in addition to the existing relative TSR test.
Thus, irrespective of the relative TSR performance, no awards under the FY2021 LTIP will vest unless the absolute TSR over the
performance period has been positive.
− Securityholder approval for the actual awards of restricted securities under the STI Plan to the MD & CEO will in future be sought
on a retrospective basis. This is a change from previous practice where approval was obtained in advance for a maximum number
of awards with the final number to be awarded to be determined by the Board.
− Enhanced disclosure of STI outcomes incorporating retrospective disclosure of targets and performance against those targets.
− As discussed in the 2019 Report, following a review of the LTIP, changes were introduced for a number of aspects of the LTIP for
FY2020 and subsequent awards. The review concluded that use of relative Total Security Return (TSR) as the sole performance
hurdle continues to be appropriate. This decision was supported by the challenges to setting targets for other measures posed
by the impact of COVID-19. Given the location of the Groups’ businesses and its business strategy, for future awards under the
LTIP, the Boards adopted a new comparator group of over 100 OECD-domiciled companies in the Global Listed Infrastructure
Organisation (GLIO) group as a more relevant basis for assessing performance. Please refer to section 5.4 below for further
information on the changes to the FY20 LTI Awards
How are KMP Executives remunerated and how is this aligned with Atlas Arteria performance?
The Boards recognise that to build sustainable long-term growth in securityholder wealth, Atlas Arteria must attract and retain
talented people and align their interests and behaviours with securityholders’ interests.
To do so, the Groups have developed a remuneration framework that aligns executive remuneration and the Groups’ performance.
The framework aims to achieve a balance between fixed and performance based remuneration and between short and
long-term performance incentives. To ensure our remuneration quantum and structure is market competitive, consideration
has been given to the market median remuneration of companies of a similar size and complexity to Atlas Arteria. Target
remuneration comprises:
MD & CEO
KMP Executives
33%
67%
57%
43%
■ Fixed remuneration
■ Variable remuneration
Performance based remuneration comprises both short and long-term performance components:
− The STI for FY2020 was based on an assessment of performance against a balanced scorecard of financial measures (weighted
70%) and non-financial measures (weighted 30%) linked to key financial and business objectives. For further information
regarding the performance outcomes and STI structure for the MD & CEO and the KMP Executives, see section 6.2
− For the long-term incentive component, Atlas Arteria TSR performance is assessed relative to selected local and international
companies with similar characteristics to ensure there is alignment between the financial interests of executives and
securityholders. For further information regarding the LTIP structure (including the changes introduced for 2020), performance
measure, relative TSR comparator group constituents and vesting schedule, see section 5.4.
Information on governance provisions such as clawback, malus, treatment of awards on cessation of employment and change
of control is provided in section 8.
46 | ATLAS ARTERIA ANNUAL REPORT 2020
What happens to variable remuneration awards in the event there is a change of control?
In the event of a change of control, the Boards have absolute discretion to determine the treatment of STI and LTIP awards.
However, if the Boards do not exercise their discretion, the following default treatments will apply:
− STI: Cash based STI will be assessed on a pro rata basis and paid at that time based on performance, and deferred STI will
vest in full on the basis that it relates to performance targets which have already been achieved.
− LTIP: Vesting based on performance to the end of the most recent period and pro-rated for time.
What did the MD & CEO and KMP Executives receive during FY2020?
The MD & CEO and KMP Executives received fixed remuneration, STI awards delivered in restricted securities and awards under
the Groups’ long term incentive plan in respect of FY2020.
The STI was awarded for FY2020 based on achievements in operating the business.
An LTIP grant was made for FY2020. This LTIP grant will be assessed against the LTIP performance targets and, if the targets
are met, will vest following the conclusion of the performance period ending 31 December 2022. For further information regarding
the LTIP performance targets, see section 5.4.
As a result of the impact of COVID-19, the performance hurdle for the FY2018 LTI Award was not achieved and hence no amount
has vested.
The Board retains discretion to modify, defer or cancel any awards granted under the STI and LTI plans. While no discretion was
applied to modify the amounts awarded under the STI or LTI plans, discretion was exercised to defer 100% of the awards under the
STI plan to restricted securities.
4. FY2020 business performance highlights
4.1 Overview of business performance
Notwithstanding the impact of COVID-19 on the business, the strength of our portfolio and balance sheet has enabled the Groups
to continue to deliver against strategy with a number of key initiatives implemented that will drive long-term value creation for
securityholders. These have been discussed on pages 10 to 11.
4.2 Atlas Arteria’s performance
The following table outlines the key financial metrics over the past five financial years up to and including 2020 that underpin
the STI and LTI plans.
Dividend Payments per Security ($)
Cash flow per security ($)
EBITDA proportionate ($m)1
Share price (at year end) ($)
Total Security Return
2020
0.11
0.31
884.8
6.50
-15.5%
2019
0.30
0.27
923.0
7.83
32.2%
2018
0.24
0.26
869.4
6.16
3.4%
2017
0.20
0.19
652.8
6.19
30.6%
2016
0.18
0.18
562.4
4.92
28.8%
1. Proportionate EBITDA from the underlying investments as reported for each financial year.
ALX share price (2010-2020)
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
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5. Remuneration framework
The remuneration framework for the executive team aims to achieve balance – between fixed and performance-based remuneration,
between short- and long-term performance incentives, and between financial, non-financial and strategic outcomes – as well
as providing a balance of remuneration received in cash and in securities.
Our objectives for the executive remuneration framework are to ensure that it:
− Is simple to understand, implement and communicate;
− Supports the delivery of the annual business plans whilst also reflecting the long-term needs of the business;
− Reflects the experience of the executive and complexity of the role and business compared to the market;
− Encourages behaviours that are aligned to our business strategy, performance and securityholders;
− Reflects performance measures which our executives have the ability to influence and allows differentiation of executive
incentive outcomes; and
− Encourages executive equity ownership so that executives have ‘skin in the game’ thus aligning executives to securityholders.
5.1 Positioning and mix of executive remuneration
To ensure our remuneration quantum and structure is market competitive, reference is made to the median of a group of
comparator companies of similar size and complexity to Atlas Arteria. The remuneration arrangements of selected industry
comparators are also considered for each role.
The target and maximum remuneration framework for the MD & CEO and the KMP Executives comprises fixed remuneration,
STI and LTI as in the graphs below.
Remuneration mix based on achieving ‘target’ performance*
MD & CEO
KMP Executives
33%
33%
30%
17%
17%
13%
13%
44%
■ Fixed remuneration
■ Target STI – cash
■ Target STI – deferred
■ Target LTI
Remuneration mix based on achieving ‘maximum’ performance*
MD & CEO
KMP Executives
29%
29%
21%
21%
27%
17%
17%
39%
■ Fixed remuneration
■ Maximum STI – cash
■ Maximum STI – deferred
■ Maximum LTI
* For FY2020, STI awards will be delivered entirely in restricted securities.
Outlined below is further detail regarding the STI and LTI plans for the 2020 financial year.
5.2 Fixed pay
Fixed pay recognises the market value of an individual’s skills, experience, accountability and their contribution in delivering the
requirements of their roles. Fixed pay includes base pay and superannuation.
Securityholders were advised in the 2019 Report, that the Boards had commenced a review of executive remuneration to ensure
our remuneration levels are competitive with companies of similar size and complexity. This review was concluded during the year
and further information on the outcomes of the review is included at section 6.1.
48 | ATLAS ARTERIA ANNUAL REPORT 2020
5.3 Short-term incentive
Executives, middle management and additional participants as determined by the Boards are eligible to participate in the annual
STI plan. Details regarding the STI arrangements of the MD & CEO and KMP Executives are set out below. The size of each STI
award is capped at an agreed percentage of fixed remuneration for each executive. The value of the STI payment made at the end
of the performance period is a function of performance against a balance of financial and non-financial performance measures
aligned with the Atlas Arteria’s annual business plans.
Element
Description
Opportunity
The STI is subject to achievement of defined performance targets.
The target STI opportunity represents an opportunity to earn 100% of fixed remuneration for the MD & CEO
and 60% of fixed remuneration for the KMP Executives. When assessing performance, the Boards have
discretion to increase or decrease an STI award subject to an overall cap of 150% of Target.
Performance period
Performance is measured over a one year performance period from 1 January to 31 December.
STI deferral
STI objectives
To assist in creating alignment with securityholders and in achieving the minimum shareholding requirement,
50% of the STI outcome is normally deferred into restricted securities for a one year period following the
conclusion of the performance period, subject to ongoing service and the discretion of the Boards. For FY2020
in view of the impact of COVID-19 on the business, it was decided that 100% of the STI awarded would be
delivered in restricted securities.
STI targets were set for FY2020 based on expected performance prior to the impact of COVID-19 and
comprised a combination of financial measures and non-financial measures relating to specific strategic
outcomes and taking account of culture and behaviours. No adjustment has been made to targets to reflect
the impact of COVID-19 on the business.
5.4 Long-term incentive
To align with the interests of securityholders, executives and other participants as determined by the Boards are eligible to
participate in an LTIP. Details of the LTIP arrangements of the MD & CEO and KMP Executives are set out below. The size of each
year’s grant is capped at an agreed percentage of fixed remuneration for each executive. The value of the LTIP award made at the
end of the vesting period is a function of:
− Atlas Arteria’s TSR performance relative to a group of Australian and international peer companies (which determines the
number of securities granted that vest);
− The change in the price per Atlas Arteria stapled security (which determines the value of each stapled security that vests); and
− The value of distributions that would have been made during the vesting period to the number of securities that vest
(Distribution equivalents).
As a result, management incentives are aligned with the long-term interests of securityholders to achieve strong performance
relative to peers and to generate an appropriate balance of security price performance and distributions.
During 2019, the Boards and the PRCs reviewed a number of aspects of the long term incentive plan and as a result the following
decisions were made in relation to the awards made under the LTIP in 2020 (no changes were made to the terms of the awards
for previous years):
1 To continue to use relative Total Security Return (relative TSR) as a sole performance hurdle given the current strategic
focus of the business on longer term value creation and business optimisation. The Boards concluded this year given the
impact of COVID-19 on setting reliable targets measures such as EBITDA or cash flow are not currently the most appropriate
performance measures. The Boards acknowledge as the business evolves it may be more appropriate to introduce a suitable
further measure/s in addition to relative TSR for assessing LTIP performance;
2 To adopt a new peer group for assessment of relative TSR comprising OECD-domiciled companies in the Global Listed GLIO
in respect of future LTIP awards. The GLIO is an organisation that provides a global platform for information on listed
infrastructure companies and includes approximately 125 OECD-domiciled members that represent approximately $3,765bn
(as at 1 January 2020) in market capitalisation. The GLIO was selected as it is a larger and less volatile measure than the current
peer group and is specific to the infrastructure sector rather than being a mix of infrastructure and property organisations;
3 To use a volume weighted average security price (VWAP) over a 40 business day period at the start and the end of the
performance period for the calculation of TSR performance in place of the current point to point calculation. A 40 business day
averaging period for calculating the security price for TSR performance helps to eliminate the impact of short term security
price movements on vesting outcomes; and
4 To continue to use a 10 business day VWAP for the period following release of the Groups’ annual results for calculating the
security price on which to base the number of securities to be issued for each LTIP Award.
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Element
Description
Opportunity
The maximum grant value of LTIP opportunities represents 100% of fixed remuneration for the MD & CEO and
70% of fixed remuneration for the KMP Executives. The number of awards granted is based on face value.
For FY2018, the number of awards granted was determined based on the 10 day VWAP immediately following
the 2019 Annual General Meeting (which was held on 15 May 2019).
For FY2019 and subsequent years, the number of awards to be granted is determined based on the 10 day
VWAP immediately following the announcement by Atlas Arteria of its annual results.
Vehicle
Awards are delivered in the form of performance rights. A performance right is a right to acquire one fully paid
Atlas Arteria security, subject to meeting pre-determined performance measures.
Performance measure
LTIP performance is assessed against relative TSR. Relative TSR was selected as the sole performance
measure as it measures security holding value creation objectively, can be used for comparing performance
across different jurisdictions and is widely understood and accepted by stakeholders.
For the FY2018 and FY2019 grants, Atlas Arteria’s TSR performance will be assessed against a local and global
industry comparator group, comprising Abacus Property Group, APA Group, Aurizon Holdings Limited, AusNet
Services, Charter Hall Group, Growthpoint Properties Australia, Qube Holdings Limited, Spark Infrastructure
Group, Sydney Airport, Transurban Group, 3i Infrastructure, Cogent Communications Holdings Limited, Eiffage
SA, Genesee & Wyoming Inc., Getlink, Macquarie Group Infrastructure Corporation and Zayo Group Holdings,
Inc. These companies were selected as they operate in comparable industries, with asset size, market
capitalisation, jurisdiction of assets and operational control, in relevant ranges.
For the FY2020 grant, Atlas Arteria’s TSR performance will be assessed against a group of approximately
125 OECD-domiciled companies included in the GLIO as at 1 January 2020.
The comparator group may, at the discretion of the Boards, be adjusted to take into account events during the
Performance Period including, but not limited to takeovers, mergers, de-mergers or de-listings, so that the
outcome appropriately reflects the circumstances. An adjustment has been made to the peer group for the
FY2018 and FY2019 awards to reflect the change of ownership of Genesee & Wyoming and Zayo Group which
are now in private ownership.
Vesting schedule
Relative TSR performance is assessed on a sliding scale, with vesting determined as follows:
Atlas Arteria’s TSR performance
Below the 51st percentile
At the 51st percentile
% vesting
0%
50%
Between the 51st percentile & 75th percentile
Pro rata between 50% & 100%
At the 75th percentile
100%
The Boards retain discretion to adjust the relative TSR measure in exceptional circumstances
if considered appropriate so that participants are neither advantaged nor disadvantaged by matters
outside management’s control.
Performance period
Performance is measured over a three year performance period, from 1 January to 31 December.
The performance for 2020 grant will be measured from 1 January 2020 to 31 December 2022.
Vesting and allocation
of securities
If and when the Boards determine that the relative TSR performance measure has been achieved, the
performance rights will automatically be exercised, and the relevant number of securities will be allocated.
Distribution equivalents Distribution equivalents will be payable (via a grant of securities or a cash payment, at the Boards’ discretion)
on performance rights that have vested, to the value of any distributions paid during the performance period
in respect of an equivalent number of Atlas Arteria securities.
In 2020, the Groups introduced an employee equity plan to enable all corporate employees to become securityholders of the
Groups. The plan was introduced to support employee retention, develop the team with a common purpose, share in the success
of the business and for employees to become equity holders and thus increase alignment with securityholders. All corporate
employees other than members of the Executive Team who participate in the LTIP Scheme participated in the plan. Awards to the
value of $5,000 were made in the form of share rights with vesting subject to a three year service condition. The total value of the
equity awarded in 2020 was in the order of $125,000.
5.5 Employment contracts
The remuneration and other terms of employment for the MD & CEO and KMP Executives are formalised in executive contracts.
Key contractual terms in place for FY2020 are outlined below.
Contract type
Termination notice
by either party
Termination notice
with cause
MD & CEO
Ongoing
KMP Executives
Ongoing
12 months
6 months
Immediate without
notice period
Immediate without
notice period
Termination notice
by KMP for fundamental
change in role
30 days within 21 days
of fundamental change
30 days within 21 days
of fundamental change
50 | ATLAS ARTERIA ANNUAL REPORT 2020
6. FY2020 Remuneration outcomes
6.1 Fixed pay
Securityholders were advised in the FY2019 Remuneration Report that the Boards had commenced a review of executive
remuneration to ensure our remuneration levels are competitive with companies of similar size and complexity. Executive
remuneration levels had previously been determined in 2018 prior to the successful internalisation of management and hence
had not taken into account changes in the breath and scale of the business since that time.
The review was undertaken with the assistance of an independent remuneration consultant. The review was conducted by
comparing Atlas Arteria’s remuneration levels with a group of comparable ASX listed companies selected on the basis of similar
businesses, scale of operation and skill requirements.
In undertaking the review, the Boards were very mindful of the impact of COVID-19 and the consequential short term impact
that it is having on the business. The Boards also appreciated the need for exercising restraint and using discretion to adjust
remuneration outcomes commensurate with the impact of the downturn on securityholder returns and taking into account
community expectations and the impact on customers.
The Boards considered that, there were a number of important factors to support proceeding with the review and to justify
increases in remuneration levels to align more effectively to market.
− The scope of the roles has developed since the internalisation of management on 1 April 2019 with the roles now more clearly
defined and the Senior Executive Team having demonstrated their capability and expertise in their respective roles and as a
management team.
− Several important strategic initiatives having been successfully implemented to enable the generation of sustainable cash flows
to investors, including internalisation of the management and governance of the business, and the accretive acquisition of an
additional interest in APRR.
− Management’s timely and effective response to the downturn caused by COVID-19 including among other things, successfully
negotiating with corporate lenders to obtain relief from debt covenants if required and subsequently strengthening and
enhancing the resilience and flexibility of the balance sheet to support future growth through the oversubscribed $495 million
equity raise and subsequent pay down of the corporate debt.
Given the scope of each role, the experience and capability of each executive relative to peers, the following took effect:
− MD & CEO – an increase in annual fixed remuneration to $1,300,000 from 1 September 2020.
− CFO – an increase in annual fixed remuneration to $675,000 from 1 January 2020 and to $710,000 from 1 September 2020.
Whilst acknowledging the need to ensure that our people are remunerated competitively, the Boards also acknowledge the
impact that COVID-19 has had on our businesses and securityholders. In this regard, the Board have responded appropriately
by introducing the following measures at the time of the fixed pay review:
− The exercise of Board discretion to award 100% of the 2020 STI award as deferred equity. Under the STI Plan Rules, STI awards
are normally paid 50% in cash and 50% in deferred equity, vesting in 12 months.
− Introduction of a positive TSR requirement in addition to the existing relative TSR measure for the LTI grant to be made in 2021.
The effect would be that an LTI award would not vest if the absolute Total Securityholder Return is not positive, even if the TSR
relative to peers would mean that an LTI payment would otherwise be made.
− Implement a remuneration ‘freeze’ for 2021, with the next review of remuneration for the MD & CEO and the CFO to be
conducted in 2022.
− Securityholder approval for awards of Restricted Securities under the STI Plan to the MD & CEO will in future be sought
on a retrospective basis for the actual number of awards required to be made.
− A pay review increase for the MD & CEO undertaken earlier in the year was deferred to take effect on 1 September and potential
STI and LTI awards have been calculated on the fixed pay rate in place prior to the increase.
6.2 Short term Incentive Plan
STI performance in respect of FY2020 was assessed based on a combination of financial and non-financial measures.
As noted above the Board exercised discretion to amend the terms of the STI Awards for FY2020 for the MD & CEO and the KMP
Executives to provide for 100% to be withheld and awarded in Atlas Arteria Restricted Securities.
Details of the FY2020 STI Awards for the MD & CEO and KMP Executives are set out below.
The annual performance assessment includes consideration of both what is achieved and how it is achieved by reference
to each executive’s behaviours during the year. The actual STI awarded can be adjusted where these expectations are not met.
No such adjustments were made for Executive KMP for FY2020. The factors considered by the Board in relation to the exercise
of discretion included:
− The 2020 total remuneration for each of the Senior Executive Team would be significantly lower than 2019, as none of the
financial STI targets (which account for 70% of the STI award), except for the KPI relating to corporate costs, were likely to be met.
− The value of deferred equity held by each executive in the STI and LTI Plans and the value of their personal holdings of ALX
securities has been reduced as a result of the impact of COVID-19 on the ALX share price.
− The probability of existing LTI awards vesting deteriorated significantly during 2020, as the peer group includes a number of listed
utilities that have not been as severely affected by the downturn as toll road companies and property companies. The 2018 Award
did not vest when performance at 31 December 2020 (the end of the performance period) was assessed primarily due to the
impact of COVID-19 and the 2019 and 2020 awards are currently tracking below levels required for vesting for similar reasons.
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6.2.1 MD & CEO
Performance area
Weighting
Target
Result
Commentary
Proportional adjusted EBITDA
(proportional performance
of each business at constant
exchange rates) 1
Free Cashflow Received
from Operations (at constant
exchange rates)
Distributions of $0.36 per
Security 2
Corporate operational
expenditure (excluding
costs of STIs and LTIs, special
projects and at constant
exchange rates) 3,4
$1,190m
$909
$370m
$293
− As a result of the impact of COVID-19 restrictions on the
operations of the businesses, proportionate EBITDA
on a constant currency basis was below threshold
− Distributions from APRR are the primary source of cash
from operations and were adversely impacted by the reduced
revenue from operations due to COVID-19, resulting in a below
threshold outcome
$0.36
$0.11
− The first half distribution for 2020 of 11.0 cps was paid
on 5 October 2020, a below threshold outcome
$20.7
$20.5
an above target outcome achieved
− Corporate costs for the year were managed effectively with
Total financials
70%
11%
Strategic STI objectives were
set for the following areas
of activity
− Corporate development and
M&A activity
− Restructuring the capital
structure of businesses
− Cultural change
Significant achievements against the strategic objectives included:
− Successfully lifted our stake in APRR from 25% to just over 31%
in March 2020 increasing our share of profits and enhancing our
governance rights
− Completed during 2020 the transition from an externally
managed portfolio to an independent internal management
team that is actively managing our businesses
− Completed $495 million oversubscribed equity raise in mid-year.
The proceeds were used to repay the corporate debt facility,
strengthen the balance sheet and increase resilience and
flexibility to pursue growth opportunities
− Both S&P and Fitch re-affirmed their A- long-term issuer
ratings for APRR, and reflecting the strength of the APRR
balance sheet, maintained their outlook as ‘stable’. In October,
Fitch also increased its short-term rating despite the COVID-19
traffic disruption. In February 2020, the € 1.07 billion Eiffarie
debt was refinanced, deferring amortisation to 2023, unlocking
around 8cps in distributions for Atlas Arteria in 2020
− Completed the sale facility for U.S. based non-qualified investors,
which has unlocked our ability to access future capital from U.S.
institutional investors
− Completed a Ways of Working Review to provide opportunity
to improve job satisfaction and support the development
of team capabilities
Total non-financials
Total awarded
30%
100%
28%
39%
1. ALX proportionate EBITDA at constant exchange rates provides a direct line of sight to management to the earnings performance of the businesses
2. The Boards’ objective to mitigate the impact of the COVID 19 pandemic through disciplined capital management and sustainable business practices led to the
cancellation of the H2 2019 distribution (for which guidance had previously been given of 18cps)
3. The costs of STI and LTI are not included as they form a significant proportion of the total cost base and decisions around these items can prevent an STI outcome
being achieved and remove the incentive to manage costs effectively
4. The costs associated with special projects are removed to avoid any perception of conflict as to whether to pursue or not to pursue special projects. The Boards
approve budgets for special projects and maintain governance over the expenditure to ensure proper treatment
52 | ATLAS ARTERIA ANNUAL REPORT 2020
6.2.2 KMP Executives
The MD & CEO’s STI objectives, both financial and non-financial, for FY2020 were cascaded to the KMP Executives. Their STI
outcomes were assessed on a consistent basis with that of the MD & CEO.
6.2.3 Executive STI outcomes
Based on the performance achievement assessments described above, the following STI Awards were made in respect
of achievements relating to FY2020.
Name
Graeme Bevans
Nadine Lennie
Vincent Portal-Barrault
% of maximum
achieved
Value – cash
$
Value – equity
$
STI forfeited
$
26%
27%
29%
0
0
0
429,000
162,000
161,277
1,221,000
445,500
401,316
6.3 Long term Incentive Plan
The relative TSR hurdle for the FY2018 LTI Award was tested following the end of the performance period on 31 December 2020.
The result was at the 27th percentile of the comparator group which was below threshold and hence the vesting outcome was nil.
7. Non-Executive Director fees
7.1 Determination of Non-Executive Director fees
Non-Executive Directors receive fees to recognise their contributions to the Boards and Committees on which they serve.
No performance related remuneration is payable to Non-Executive Directors.
There was no increase in Non-Executive Director fees during FY2020 and the Board have decided that there will be no increase
in fees in FY2021.
The fees payable for 2020 are set out below:
Fees
Board
Audit and Risk Committee
Remuneration Committee
Nominations and Governance Committee
Travel fee 3
Additional ad hoc committee fee
ATLAX
ATLIX
Chair (AUD) Member (AUD)
Chair (USD) Member (USD) Member (AUD) 1
$280,000 2
$140,000
$160,000 2
$80,000
$80,000
$30,000
$30,000
Nil
$15,000
$15,000
Nil
$10,000
$2,500 per day
$18,000
$18,000
Nil
$10,000
$9,000
$9,000
Nil
$9,000
$9,000
Nil
N/A
$1,750 per day
$1,750 per day
1. For Australian based Director.
2. Committee fees are not payable to the Chairs of the ATLAX or ATLIX Boards.
3. Non-Executive Directors are also be entitled to receive a travel fee of AUD$10,000 for each occasion where they are required to travel over 8 hours to attend a Board
meeting or strategy session.
ATLAX and ATLIX Directors are not entitled to Atlas Arteria options or securities or to retirement benefits as part of their
remuneration package.
7.2 Aggregate fee pool
As approved by securityholders at the 2019 AGM, the aggregate ATLAX Non-Executive Director fee pool is capped at AU$1,100,000
and the ATLIX Non-Executive Director fee pool is capped at US$700,000.
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8. Remuneration governance
8.1 Roles and responsibilities
The table below outlines the roles and responsibilities of the Boards, PRCs, Management and external advisors in relation to the
remuneration arrangements of Non-Executive Directors, MD & CEO and KMP Executives.
The Boards
People & Remuneration Committees Management
External advisors
Approve remuneration strategy
and approves recommendations
from the PRCs
The PRCs consist entirely of
independent Non-Executive
Directors
The Boards approve the
quantum of remuneration for
Non-Executive Directors and
the MD & CEO
Make recommendations to
the Boards regarding the
remuneration framework,
policies and practices for
Atlas Arteria
The PRCs approve the
quantum of remuneration
for KMP Executives
Makes recommendations to
the PRCs on Atlas Arteria’s
remuneration framework,
policies and practices
Provide independent advice to
the PRCs and/or Management
on remuneration market data,
market practice and other
remuneration related matters
8.2 PRC activities during FY2020
The PRCs are actively engaged in ensuring our remuneration and people programmes are contemporary and working as intended.
The activities of the PRCs during FY2020 included:
− Approving the STI outcomes for FY19 and setting the STI objectives for FY20, including recommending approval the financial
targets to the Boards.
− Monitoring progress against the FY20 STI targets.
− Reviewing the fixed pay levels of the MD & CEO and the KMP Executives.
− Engagement with investors and proxy advisers in relation to the remuneration framework and report.
− Considering and recommending to the Boards amendments to the remuneration framework.
− Recommendations regarding NED fees to the Boards for approval.
− Review and approval of the offer terms, plan rules and basis of participation for the Groups’ equity plans.
− Consideration of a formal security holding policy for NEDs and KMP Executives.
− Consideration of market and regulatory related developments impacting the Groups’ remuneration arrangements including
adoption of a framework for the exercise of discretion over variable pay decisions.
− Adoption of a policy for dealing with changes to the composition of TSR comparator groups during the performance period.
− Interventions to address the impact of COVID-19 including employee well-being.
− Review progress against the ALX People Plan and Priorities.
− Consideration of the Diversity and Inclusion objectives.
− Review of the Talent Management Framework and undertaking the annual Talent and Succession Review.
− Review and approval of the Atlas Arteria People Strategy (2021 – 2023).
− Executive Talent & Succession Reviews.
8.3 External Advisers
The requirement for external remuneration advisor services is assessed in the context of matters the PRCs need to address.
Remuneration advisers are engaged by and report directly to the PRCs. Potential conflicts of interest are considered when advisers
are appointed, including the level of access to management. External advice is used as a guide but does not serve as a substitute
for Directors’ consideration of the relevant matters. Therefore, no remuneration recommendations, as defined by the Corporations
Act 2001 (Cth), were made by external remuneration advisors during FY2020.
54 | ATLAS ARTERIA ANNUAL REPORT 2020
8.4 Board discretion over remuneration decisions
The PRCs and the Boards consider it important to have the ability to exercise discretion as required over remuneration decisions
to ensure that remuneration outcomes reflect the performance of the Groups and the individual executives and are consistent
with securityholder expectations. Examples of the circumstances where discretion can be exercised include:
Provision
STI
LTI
Variable pay outcomes
The Boards have adopted a policy to consider if there are any circumstances that may require the exercise
of discretion at the time of approval of variable pay outcomes such as approval for STI awards and LTI vesting
outcomes. This includes consideration both on an ongoing basis as situations that may require discretion arise
and at the time decisions in relation to the actual variable pay outcomes are being made
Clawback/Malus
In the event of:
− Material non-compliance with any financial reporting requirement or other policies and operating
procedures of the Groups;
− Fraudulent or dishonest behaviour; or
− Misconduct
The Boards have discretion to determine that some or all deferred STI restricted security awards and unvested
LTIP awards are forfeited
Cessation of employment If a participant resigns or is terminated for cause
Change of control
(including gross misconduct), any deferred securities
are forfeited, and the participant is not entitled to any
further payment of cash STI. If a participant leaves
for any other reason, subject to Board discretion,
the participant will be entitled to a pro rata payment
of cash STI subject to performance and deferred
securities will normally stay ‘on foot’ until the end
of the deferred period
Upon a change of control:
− The Boards will determine in their absolute
discretion the treatment for STI opportunity
− Subject to the Boards determining otherwise,
cash based STI will be assessed on a pro rata
basis and paid at that time based on performance,
and deferred STI will vest in full
If a participant resigns or is terminated for cause
(including gross misconduct), unvested performance
rights will automatically lapse. If a participant leaves
for any other reason, subject to Board discretion,
a pro-rata number of unvested performance rights
(reflecting the portion of performance period served)
will normally stay ‘on-foot’ to be tested against the
performance condition at the end of the original
performance period
Where a change of control occurs or is likely to occur,
the Boards have discretion to determine the treatment
of unvested equity awards and the timing of such
treatment. In the event the Boards do not exercise
its discretion, the LTIP will vest pro rata for time
and performance
8.5 Minimum security holding requirements
Minimum security holding requirements apply to support the alignment between the interests of the Directors, KMP Executives
and securityholders through significant exposure to the movements in securities price and distributions.
Role
Minimum shareholding
Timing to meet requirement
Non-Executive Directors
100% of annual director base fees
3 years from the later of July 2017 (when the policy was
implemented) or from the date of their appointment
MD & CEO
KMP Executives
100% of fixed remuneration
50% of fixed remuneration
5 years from appointment
5 years from appointment
8.6 Atlas Arteria Securities Trading Policy
The Atlas Arteria securities (windows) trading policy applies to Directors, including Directors appointed by Atlas Arteria to investee
entities and to all Atlas Arteria staff. The windows trading policy means that trading in securities can only occur at the discretion
of the ATLAX and ATLIX Boards during prescribed trading windows and with appropriate approvals. All other periods are ‘closed
periods’ for the purposes of the ASX Listing Rules. ATLAX and ATLIX Directors and Executives must not enter into margin loans
or other financing arrangements over their Atlas Arteria Securities.
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9. Statutory disclosures
9.1 Executive statutory remuneration disclosures for FY2020
The following table shows the total remuneration for the MD & CEO and KMP Executives for FY2020.
Name
Financial
year
Cash
salary
Annual
leave
accrual
movement
Cash STI 1
Superannuation
contributions
Value of
share based
payments
LTI 2,3
Value of
share based
payments
STI 4
Total
remuneration
Performance
based pay %
Graeme Bevans
2020 $1,145,318
$109,093
$0
$21,348
$455,062
$637,535
$2,368,356
2019 $1,079,231
($21,992)
$783,637
$20,767
$342,505
$543,035
$2,747,183
Nadine Lennie
Vincent
Portal-Barrault 5
2020
2019
2020
2019
$665,318
$91,456
$0
$21,348
$214,807
$212,624
$1,205,553
$554,228
$25,078
$259,714
$20,767
$126,860
$166,055
$1,152,702
$617,826
$154
$0
$16,980
$227,666
$203,570
$1,066,196
$583,601
$4,595
$241,712
$16,015
$141,903
$116,886
$1,104,712
Total
Total
2020 $2,428,462 $200,703
$0
$59,676
$897,535 $1,053,729 $4,640,105
2019 6 $2,217,060
$7,681 $1,285,063
$57,549
$611,268
$825,976 $5,004,597
46.1%
60.8%
35.5%
47.9%
40.4%
45.3%
42.1%
54.4%
1. No STI was awarded in cash for FY2020 with 100% of the STI awarded in deferred equity.
2. The amounts for LTI share based expenses are included based on the fair value of equity awards. External valuation advice has been used to determine the value of
performance rights awarded in the year ended 31 December 2020. The valuation has been made using the Black Scholes Option Pricing Model that includes a Monte
Carlo simulation analysis. Details of the fair values of equity awards granted during the year are contained in the foot notes in the table titled ‘Performance rights
held during the year’ at 9.3 below.
3. The number of performance rights allocated to each participant is determined based on face value.
4 STI share based payments are expensed from the start of each STI performance period to the end of the relevant restriction period. Hence, the amount disclosed for
FY20 includes amounts for STIs awarded in deferred equity in respect of three performance periods – being the two performance periods that ended in FY19 as the
restriction periods for those awards ended during FY20 and also an amount for the FY20 STI which was awarded 100% in equity. The comparative figure for FY2019
includes amounts in respect of the 50% of the STI awards made in equity for the two performance periods that ended in FY19.
5. The 2020 remuneration for the Luxembourg based executive was converted to AUD at a rate of AUD $1 – Euro 0.6055 (2019 0.6254). Fixed pay was increased by 2.5%
as required by Luxembourg labour law.
6. Although taking up their positions on 1 April 2019, the remuneration disclosures for FY2019 have been included as though they were KMP for the entire year.
56 | ATLAS ARTERIA ANNUAL REPORT 2020
9.2 Non-Executive Director statutory remuneration disclosures for FY2020
The following table shows the fees paid to Non-Executive Directors of ATLAX and ATLIX for FY2020.
Name
Financial year
and fees Superannuation
Total
and fees Superannuation
Total
ATLAX fees (AUD)
ATLIX fees
Cash salary
Cash salary
Debbie Goodin 1
David Bartholomew
Jean-Georges Malcor
Nora Scheinkestel 2
Jeffrey Conyers
Fiona Beck 3
Caroline Foulger 4
Andrew Cook 5
Derek Stapley 6
James Keyes 7
Christopher Leslie 8
Total
Total
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
$183,842
$190,365
$157,534
$172,100
$168,983
$184,340
$216,594
$269,233
$17,461
$17,135
$14,966
$15,400
$1,017
$660
$18,064
$20,767
$201,303
14,916 (AUD)
1,417 (AUD)
16,333(AUD)
$207,500
$172,500
$187,500
$170,000
$185,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$234,658
74,926(AUD)
7,118 (AUD)
82,044 (AUD)
$290,000
90,736 (AUD)
7,264 (AUD)
98,000 (AUD)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$726,953
$816,038
$51,508
$53,962
$778,461
$870,000
160,000 (USD)
179,250 (USD)
103,563 (USD)
41,292(USD)
57,508 (USD)
–
8,948 (USD)
–
87,043 (USD)
111,762 (USD)
37,692 (USD)
116,000 (USD)
–
24,500 (USD)
$744,259
$764,749
– 160,000 (USD)
– 179,250 (USD)
– 103,563 (USD)
–
–
–
–
–
–
41,292(USD)
57,508 (USD)
–
8,948 (USD)
–
87,043 (USD)
– 111,762 (USD)
–
37,692 (USD)
– 116,000 (USD)
–
–
$8,535
$7,264
–
24,500 (USD)
$752,794
$772,013
1. Appointed Chairman of ATLAX and Non-Executive Director of ATLIX on 1 November 2020.
2. Retired as a Non-Executive Director, effective 1 November 2020.
3. Appointed as a Non-Executive Director, effective 13 September 2019.
4. Appointed as Non-Executive Director, effective 19 May 2020.
5. Appointed as a Non-Executive Director, effective 25 November 2020.
6. Retired as a Non-Executive Director 25 November 2020.
7. Retired as e a Non-Executive Director on 19 May 2020.
8. Retired as a Non-Executive Director on 1 April 2019.
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9.3 Equity instrument disclosures relating to KMP
Security holdings
The table below outlines the number of ordinary securities held by each KMP including their personally related parties,
as at 31 December 2020, and the minimum security holding requirements.
Non-Executive Directors have acquired their security holdings from their personal resources on market and in accordance with
Atlas Arteria’s trading policy. KMP Executives acquire their security holdings from awards that vest under the Groups’ equity plans.
All Directors and Executives are tracking to meet their security holding requirement on a timely basis.
Non-Executive Directors
Name
Debbie Goodin 3,4
David Bartholomew 3
Jean-Georges Malcor 3
Nora Scheinkestel 3,5
Jeffrey Conyers 3,5
Fiona Beck 3,6
Caroline Foulger 7
Andrew Cook 8
Derek Stapley 9
James Keyes 10
Balance at
1 January 2020
Changes
Balance at
31 December
2020
Value at
31 December
2020 1
Minimum
security
holding
requirement 2
Date security
holding to be
attained
26,579
20,506
20,238
103,824
42,381
8,333
–
–
26,666
5,952
6,325
4,708
9,838
4,742
17,457
10,520
8,500
–
12,000
17,952
32,904
25,214
30,076
–
59,838
18,853
8,500
–
–
–
$213,876
$163,891
$195,494
–
$388,947
$122,545
$55,250
–
–
–
$220,000 11
$140,000
$140,000
–
$104,411
$104,411
$104,411
$104,411
–
–
Nov-23
Oct-21
Nov-21
N/A
Jul-20
Sep-22
May-23
Nov-23
N/A
N/A
1. Based on the closing price of Atlas Arteria securities on 31 December 2020 of $6.50. The requirement is assessed at the higher of the purchase price or market value
of the securities.
2. The minimum security holding requirement for ATLIX Board members has been converted to AUD at the 31 December 2020 exchange rate of AUD$1 = USD$0.7662.
3. Includes securities acquired in the ALX Share Purchase Plan announced on 28 May 2020.
4. Appointed as ATLIX Non-Executive Director on 1 November 2020.
5. Retired as a Non-Executive Director 1 November 2020.
6. Appointed as a Non-Executive Director 13 September 2019.
7. Appointed as a Non-Executive Director 19 May 2020.
8. Appointed as a Non-Executive Director 25 November 2020.
9. Retired as a Non-Executive Director 25 November 2020.
10. Retired as a Non-Executive Director 19 May 2020.
11. Securityholding requirement based on the sum of the ATLAX and the ATLIX Non Executive Director base fees
MD & CEO and KMP Executives
Name
Graeme Bevans
Nadine Lennie
Vincent Portal-Barrault 2
Balance at
1 January 2020
90,731
20,758
5,636
Changes
62,999
15,834
33,688
Balance at
31 December
2020 1
Value at
31 December
2020
Minimum
security
holding
requirement
Date security
holding to be
attained
153,730
$999,245
$1,300,000
36,592
39,324
$237,848
$255,606
$355,000
$302,982
May-23
Jul-23
Dec-23
1. Based on the closing price of Atlas Arteria securities on 31 December 2020 of $6.50. The requirement is assessed at the higher of the purchase price or market value
of the securities.
2. The minimum security holding requirement for Luxembourg executives has been converted to AUD at the 31 December 2020 exchange rate of AUD$1 = Euro 0.6238.
58 | ATLAS ARTERIA ANNUAL REPORT 2020
Options
No options over unissued ordinary securities of Atlas Arteria existed or were granted to KMP during FY2020.
Performance rights held during the year
The numbers of performance rights over ordinary securities in the Groups held during the financial year by each KMP Executive
as well as the value of performance rights granted or exercised are set out in the table below. Vesting is subject to achieving
challenging performance hurdles over the performance period.
Name
Graeme Bevans
Nadine Lennie
Vincent Portal-Barrault
Balance at
31 December
2019
Granted in the
year ended
31 December
2020 1
Exercised in
the year ended
31 December
2020
Lapsed in the
year ended
31 December
2020
Balance at
31 December
2020
Unvested at
31 December
2020
Value of share
rights granted
during year 2
#
276,758
101,268
104,458
#
146,434
62,900
61,332
#
0
0
0
#
0
0
0
#
423,192
164,168
165,790
#
423,192
164,168
165,790
$
502,269
315,758
307,887
1. The number of share rights granted during the year under the FY2020 Long Term Incentive Awards which are subject to performance hurdles.
2. External valuation advice from EY has been used to determine the value of the share rights awarded during year ended 31 December 2020. The valuation was made
using the Black Scholes Option Pricing Model that includes a Monte Carlo simulation analysis. The value per instrument of the Share Rights granted during the year
to the MD & CEO was $3.43 and to the CFO and COO was $5.02.
3. There were 1,000,733 unvested Share Rights on issue at the time of this Report.
Unvested STI Equity Awards during FY2020
During FY2020, awards of restricted securities equal to 50% of their Awards under the Groups’ FY2019 STI Plan for the Post
Internalisation Period (1 April 2019 to 31 December 2019) were granted to the MD & CEO and the KMP Executives. The securities
were restricted for 12 months from the end of the performance period (31 December 2019). Following the end of the restriction
period, the PRCs confirmed that all KMP Executives complied with the terms of the awards and accordingly, the awards have
vested in full.
Details of the Awards are as follows:
Name
Graeme Bevans
Nadine Lennie
Vincent Portal-Barrault
Balance at
31 December
2019
Granted in the
year ended
31 December
2020 2
Vested in the
year ended
31 December
2020 1
Lapsed in the
year ended
31 December
2020
Balance at
31 December
2020
Unvested at
31 December
2020
#
76,214
20,758
5,636
#
82,369
25,834
28,850
#
76,214
20,758
5,636
#
0
0
0
#
82,369
25,834
28,850
#
82,369
25,834
28,850
Value of
restricted
securities
granted during
year
$
618,748
194,062
216,718
1. Restricted securities awarded in respect of the FY2019 Pre Internalisation STI Plan. These securities vested in full during FY2020.
2. Restricted securities granted in respect of the FY2019 Post Internalisation STI Plan. These securities vested in full in January 2021.
9.4 Loans to Directors or related parties
There were no loans to Directors or related parties during FY2020.
9.5 Other transactions with KMP
There were no other transactions with KMP.
ATLAS ARTERIA ANNUAL REPORT 2020 | 59
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS DIRECTORS’ REPORTS
The Directors of Atlas Arteria International Limited (‘ATLIX’) and the Directors of Atlas Arteria Limited (‘ATLAX’) submit the
following reports, together with the Financial Report for Atlas Arteria and the Financial Report for ATLAX and its controlled
entities (‘ATLAX Group’), for the year ended 31 December 2020. The information below also forms part of these Directors’ Reports:
− Strategic Framework on pages 10 to 11
− Performance review on pages 37 to 41
− Information on the Directors, Company Secretaries and Directors’ meetings on pages 33 to 36
− Risk management on pages 30 to 31
− Remuneration report on pages 42 to 59
An Atlas Arteria stapled security comprises one ATLIX share ‘stapled’ to one ATLAX share to create a single listed security traded
on the Australian Securities Exchange (‘ASX’). The stapled securities cannot be traded or dealt with separately.
AASB 3 Business Combinations and AASB 10 Consolidated Financial Statements require one of the stapled entities of a stapled
structure to be identified as the parent entity for the purpose of preparing a consolidated Financial Report. In accordance with this
requirement, and consistent with previous reporting periods, ATLIX has been identified as the parent entity of the consolidated
group comprising ATLIX and its controlled entities (‘ATLIX Group’) and ATLAX Group, together comprising ‘Atlas Arteria’, ‘ALX’
or ‘the Groups’.
All values are in Australian Dollars unless otherwise indicated.
Principal activities
The principal activities of Atlas Arteria are to own, operate and develop toll roads globally, creating value for investors over the
long term through considered and disciplined management and sustainable business practices. The roads developed, operated
or managed by Atlas Arteria benefit communities through reduced travel times, greater time certainty, reduced fuel consumption
and carbon emissions.
As of the date of this report, Atlas Arteria owned four businesses. The ATLIX Group currently has a 31.14% interest in the
APRR toll road group in France and 31.17% interest in Autoroute des deux lacs (‘ADELAC’). Together APRR and ADELAC comprise
a 2,318km motorway network located in the East and South East of France. In the U.S., Atlas Arteria has 100% of the economic
interest in the Dulles Greenway, a 22km toll road in the Commonwealth of Virginia. In Germany, the ATLIX Group owns 100%
of Warnowquerung GmbH & Co. KG and its general partner (collectively ‘Warnow Tunnel’) in the north-east city of Rostock.
Distributions
Distributions paid to securityholders were as follows:
Dividend of 11.0 cents per stapled security (‘cps’) paid on 5 October 2020 (a)
Dividend of 15.0 cps paid on 4 October 2019 (b)
Distribution of 15.0 cps paid on 5 April 2019 (c)
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
105,492
–
–
105,492
–
102,505
102,491
204,996
(a) The dividend paid on 5 October 2020 comprised of an ordinary dividend of 11.0 cps. The dividend was paid in full by ATLIX.
(b) The dividend paid on 4 October 2019 comprised of an ordinary dividend of 15.0 cps. The dividend was paid in full by ATLIX.
(c) The distribution paid on 5 April 2019 comprised a capital return of 7.8 cps and an unfranked Australian ordinary dividend of 0.2 cps paid by ATLAX and an ordinary
dividend of 7.0 cps paid by ATLIX.
60 | ATLAS ARTERIA ANNUAL REPORT 2020
Review and results of operations
Following the successful internalisation of the Group’s management in 2019, 2020 was a year of building resilience and capacity
for growth under a new and highly experienced international management team. Our businesses started the year with momentum,
and this positioned us well to manage the disruption associated with the COVID-19 pandemic and maintain seamless operations
throughout various lockdown periods. While traffic across the jurisdictions in which our businesses are located was heavily
impacted by movement restrictions implemented in response to COVID-19, the resilience of our road networks during the year
demonstrated their importance in delivering critical goods and services effectively and efficiently to the communities they serve.
Risk management was a particular focus during the year, as the business navigated the impacts of COVID-19. Our businesses have
remained focused on the health and safety of their people and customers and on behaving in a way that is consistent with the
Groups’ values and focus on sustainability.
On 2 March 2020, Atlas Arteria acquired a further 6.14% indirect interest in APRR and ADELAC, such that the ATLIX Group has a
31.14% indirect interest in APRR (2019: 25.00%) and 31.17% indirect interest in ADELAC (2019: 25.03%) via a 62.29% (2019: 50.01%)
interest in MAF2 SA (‘MAF2’). We also secured direct governance rights with participation on the board of directors of each relevant
company within the structure.
The Macquarie Group acted as the manager of Atlas Arteria’s indirect interest in APRR and ADELAC until the agreement was
terminated on 2 March 2020. A new short-term transitional services agreement was in place until September 2020 for which no
fees were payable. The final management fees paid to the Macquarie Group in 2020 were $2.1 million (€ 1.2 million) (2019: $28.2
million included the fees paid prior to the termination of the Atlas Arteria Management and Advisory Agreements on 15 May 2019).
During the year Atlas Arteria undertook a successful $495 million equity raise to restructure the balance sheet, enhance resilience
and provide additional capacity for growth.
In the context of uncertainty around COVID-19, the final 2019 distribution was cancelled and cash relating to this distribution,
together with the proceeds from the equity raise were used to repay the only remaining holding company debt facility within the
Atlas Arteria structure. The equity raising and subsequent repayment of the $571.3 million (€ 350 million) debt facility in June,
positioned Atlas Arteria with a more flexible balance sheet to pursue near term growth opportunities as they arise.
The first half distribution for 2020 consisting of an ordinary dividend of 11.0 cps was paid in full by ATLIX on 5 October 2020.
The statutory results for the year ended 31 December 2020 show a loss for Atlas Arteria of $55.8 million (2019: loss of $9.8 million).
The result reflects the weaker performance of the Groups’ businesses during the COVID-19 pandemic period and the decision by
the Boards of ATLIX and ATLAX at 30 June 2020 to impair their respective investments in Dulles Greenway by a total $143.9 million
(US$100.0 million), (ATLIX $119.3 million (US$82.9 million) and ATLAX $24.6 million (US$17.1 million)).
Further details regarding the review of operations can be found on pages 37 to 41.
Risk Management
Atlas Arteria has a clear risk strategy, supported by a positive and proactive risk culture. A robust risk management framework
is supported by clear risk appetite statements that enable Atlas Arteria to capture opportunities while effectively managing risk.
Risk is an inherent part of Atlas Arteria’s business and management of risk is therefore critical to continuing sustainable growth
and financial strength.
Further details regarding Atlas Arteria’s approach to risk management can be found on pages 30 to 31.
Strategic Outlook
Atlas Arteria management remains focused on driving long-term value and returns to securityholders by pursuing initiatives that
meet strategic sustainability outcomes, enhance operational performance, lengthen the tenure of our average concession term,
diversify risk and build operational and financial resilience.
ATLAS ARTERIA ANNUAL REPORT 2020 | 61
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS DIRECTORS’ REPORTS
Significant changes in state of affairs
Acquisition of the 6.14% interest in APRR and ADELAC
On 2 March 2020 the ATLIX Group acquired a further 6.14% indirect interest in APRR and ADELAC (‘the APRR Transaction’),
securing direct governance rights in respect of its total indirect interest in APRR and ADELAC, including the ability to appoint
nominees to the various boards of directors at each company within the APRR corporate holding structure. New shareholder
agreements were put in place with the ATLIX Group’s co-investors in the APRR structure, and all remaining management
agreements with the Macquarie Group were terminated other than the short term transition services agreement which expired
in September 2020 and in respect of which no fees were payable.
As part of the APRR Transaction, the ATLIX Group paid a one-off fee to Macquarie Group of $100.0 million and a one-off fee
of $103.0 million (€ 60.8 million) to Eiffage S.A. (‘Eiffage’). All these payments were made at completion on 2 March 2020.
Repayment of the € 350 million debt facility supported by the $420 million institutional placement
On 28 May 2020 Atlas Arteria undertook an equity raise to restructure the balance sheet, enhance resilience in uncertain times
and provide additional capacity for growth. The equity raise consisted of a $420 million Institutional Placement (‘Placement’) and
a non-underwritten Security Purchase Plan (‘SPP’) which subsequently raised $75 million. The Placement resulted in the issuance
of 67.7 million new ordinary stapled securities and the SPP resulted in the issuance of 12.1 million new ordinary stapled securities.
The final distribution for 2019 was cancelled and cash relating to this distribution, together with the proceeds from the Placement,
was used to repay the existing $571.3 million (€ 350 million) debt facility.
Security Sale Facility completed
A Security Sale Facility (‘the Sale Facility’) was completed during the year which enabled securityholders domiciled in the
United States who are not qualified purchasers to divest their holding in Atlas Arteria stapled securities without incurring
any brokerage costs.
Atlas Arteria has previously been prevented from accessing U.S. capital markets due to restrictions under the U.S. Investment
Company Act. These restrictions applied to Atlas Arteria because of a small number of U.S. Retail Securityholders on its register.
With this transaction now completed, Atlas Arteria will be able to access capital from certain existing and new U.S. institutional
investors, should it choose to raise capital in the future.
The Sale Facility provided for a 15% premium over the average sale price per stapled security sold over the three trading day
period from 28 August 2020 to 1 September 2020 (‘Sale Price’). Stapled securities of U.S. Retail Securityholders who did not elect
to participate in the Sale Facility were compulsorily sold through the Sale Facility in accordance with Atlas Arteria’s Constitution
and Bye-laws.
214,191 ordinary stapled securities were sold through the Sale Facility at an average sale price per stapled security of $6.52.
Likely developments and expected results of operations
No change is contemplated to the principal activities outlined on page 60. Significant changes in the state of affairs above
discusses the likely developments of Atlas Arteria and the ATLAX group.
62 | ATLAS ARTERIA ANNUAL REPORT 2020
Events occurring after balance sheet date
Capital restructure at Warnow Tunnel
On 24 February 2021 Atlas Arteria executed agreements to restructure the capital arrangements at Warnow Tunnel. A new
€ 115.0 million facility (which includes fixed and variable tranches), together with a cash injection of around € 42.0 million from
Atlas Arteria will be used to repay the existing debt, current hedging arrangements, transaction costs and reserve funding
requirements. The cash injection will be funded from cash on the Atlas Arteria balance sheet.
Management is not aware of any other matter or circumstance not otherwise dealt with in the Directors’ Reports that has
significantly affected or may significantly affect the operations of the Groups or the results of those operations or the state
of affairs of the Groups in years subsequent to the year ended 31 December 2020.
Indemnification and insurance of officers and auditors
During the year, ATLAX paid premiums of $1,401,926 and ATLIX paid premiums of $1,413,879 to insure the Directors and Officers
of the ATLAX Group and the ATLIX Group. The liabilities insured are legal and defence costs that may be incurred in defending civil
or criminal proceedings that may be brought against the Directors and Officers in their capacity as Directors and Officers of the
ATLAX Group and the ATLIX Group, and any other payments arising from liabilities incurred by the Directors and Officers in
connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty
by the Directors and Officers or the improper use by the Directors and Officers of their position or of information to gain advantage
for themselves or someone else or to cause detriment to the ATLAX Group or the ATLIX Group. It is not possible to apportion the
premium between amounts relating to the insurance against legal costs and those relating to other liabilities. So long as the
Directors and Officers of the ATLAX Group and the ATLIX Group act in accordance with the constitutions and the law, the Directors
and Officers remain indemnified out of the assets of the Groups against any losses incurred while acting on behalf of the Groups.
The auditors of the Groups are in no way indemnified out of the assets of the Groups.
Environmental regulation
The operations of the underlying businesses in which the Groups invest are subject to environmental regulations particular to the
countries in which they are located.
Each of our businesses are responsible for adopting and maintaining their own environmental and social risk management
framework that complies with the relevant regulation and standards for environmental and social responsibility matters in the
country and industry in which the business operates.
Our ability to control or influence the ongoing management of these issues will differ for each business based on the extent of our
control/governance rights at each business through the level of ownership influence, board representation and regulatory environment.
Rounding of amounts in the Directors’ Reports and the Financial Reports
The Groups are of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 issued
by the Australian Securities and Investments Commission relating to the ‘rounding off’ of amounts in the Directors’ Reports and
Financial Reports. Amounts in the Directors’ Reports and Financial Reports have been rounded to the nearest thousand dollars
in accordance with that instrument, unless otherwise indicated.
Application of class order
The Directors’ Reports and Financial Reports for Atlas Arteria and the ATLAX Group have been presented in the one report,
as permitted by ASIC Class Order 13/1050 and ASIC Corporations (Stapled Group Reports) instrument 2015/838.
ATLAS ARTERIA ANNUAL REPORT 2020 | 63
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS DIRECTORS’ REPORTS
Auditor services
Atlas Arteria has an auditor independence policy which precludes the auditors from performing certain services. This ensures
that the audit firm does not review or audit their own work, act in a management or a decision-making capacity for Atlas Arteria,
act as advocate for Atlas Arteria or jointly share economic risks and rewards. When permissible by this policy, Atlas Arteria may
decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s specific expertise and
experience with Atlas Arteria are important.
Details of the amounts paid or payable to Atlas Arteria’s auditor (PricewaterhouseCoopers) as well as other audit firms for services
provided during the year are set out below.
The Boards have considered the position and, in accordance with the advice received from their respective Audit and Risk
Committee, are satisfied that the provision of the non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor,
as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
− All non-audit services have been reviewed by the Audit and Risk Committees to ensure they do not impact the impartiality and
objectivity of the auditor; and
− None of the services undermine the general principles relating to auditor independence as set out in APES 110: Code of Ethics
for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or a decision-making
capacity for the company, acting as advocate for the company or jointly sharing economic risk and rewards.
Amounts paid or payable to PricewaterhouseCoopers Australia for:
Audit services
Other assurance services (a)
Other services (b)
Amounts paid or payable to Network firms
of PricewaterhouseCoopers for:
Audit services
Taxation services (c)
Amounts paid or payable to PricewaterhouseCoopers for:
Audit and other assurance services
Other services
Amounts paid or payable to non PricewaterhouseCoopers audit firms for:
Audit services provided by CERTIS GmbH
Wirtschaftsprüfungsgesellschaft (‘CERTIS’)
Non-audit services provided by CERTIS
ALX
ALX
ATLAX Group
ATLAX Group
Year ended
31 Dec 2020
$
Year ended
31 Dec 2019
$
Year ended
31 Dec 2020
$
Year ended
31 Dec 2019
$
755,094
134,000
49,500
938,594
503,200
213,771
–
377,547
13,215
49,500
251,600
10,043
–
716,971
440,262
261,643
506,761
120,642
627,403
357,779
219,785
577,564
46,233
38,101
–
–
46,233
38,101
1,395,855
1,074,750
170,142
219,785
1,565,997
1,294,535
436,995
49,500
486,495
299,744
–
299,744
111,132
16,031
127,163
100,256
–
100,256
–
–
–
–
–
–
(a) Other assurance services in 2020 relate to the equity raise due diligence and TRIP II accounting considerations (2019: Other assurance services relate to the equity
raise due diligence and a one off review of performance rights allocation).
(b) Other services include foreign exchange workshop and training sessions.
(c) Taxation services provided by network firms of the auditor relates to the filing of corporate income tax returns for the Groups’ entities domiciled outside of Australia.
64 | ATLAS ARTERIA ANNUAL REPORT 2020
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration for ATLAX and its controlled entities during the period, as required under section
307C of the Corporations Act 2001 and an independence declaration for ATLIX and its controlled entities during the period, is set out
on page 66.
Signed in accordance with a resolution of the Directors of Atlas Arteria International Limited:
Jeffrey Conyers
Chairman
Atlas Arteria International Limited
Hamilton, Bermuda
24 February 2021
Caroline Foulger
Director
Atlas Arteria International Limited
Hamilton, Bermuda
24 February 2021
Signed in accordance with a resolution of the Directors of Atlas Arteria Limited:
Debra Goodin
Chairman
Atlas Arteria Limited
Melbourne, Australia
25 February 2021
Jean-Georges Malcor
Director
Atlas Arteria Limited
Melbourne, Australia
25 February 2021
ATLAS ARTERIA ANNUAL REPORT 2020 | 65
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 66 | ATLAS ARTERIA ANNUAL REPORT 2020
FINANCIAL REPORT
for the year ended 31 December 2020
This report comprises:
Atlas Arteria International Limited and its controlled entities
Atlas Arteria Limited and its controlled entities
CONTENTS
Consolidated Financial Statements
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Financial Reports
1 Introduction
2 Financial Performance
2.1 (Loss)/profit for the year
2.2 Distributions
2.3 Earnings per stapled security
2.4 Income Tax
2.5 Segment information
3 Cash and Investments
3.1 Cash, cash equivalents and restricted cash
3.2 Investments accounted for using the equity method
4 Other balance sheet assets and liabilities
4.1 Intangible assets – Tolling concessions
4.2 Goodwill
4.3 Other assets
4.4 Other liabilities
5 Capital and risk management
5.1 Debt at amortised cost
5.2 Contributed equity
68
69
70
72
73
74
74
76
77
77
79
80
80
81
84
84
85
87
88
89
89
90
5.3 Reserves
5.4 Financial risk and capital management
6 Group disclosures
6.1 Parent entity financial information
6.2 Acquisition of subsidiaries
6.3 Subsidiaries
6.4 Related party disclosures
7 Other disclosures
7.1 Cash flow information
7.2 Contingent liabilities and capital commitments
7.3 Remuneration of auditors
7.4 Share based payments
7.5 Other accounting policies
7.6 Events occurring after balance sheet date
91
92
98
98
99
99
101
104
104
105
106
106
109
109
Directors’ Declaration – Alas Arteria International Limited 110
Directors’ Declaration – Atlas Arteria Limited
Independent Auditor’s Report
111
112
ATLAS ARTERIA ANNUAL REPORT 2020 | 67
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Note
Revenue and other income from operations
Revenue from operations
Other income from operations
Total revenue and other income from operations
Operating expenses
Finance costs
Share of net profits/(losses) in associates
(Loss)/profit from operations before income tax
Income tax benefit/(expense)
(Loss)/profit for the year
(Loss)/profit attributable to:
Equity holders of the parent entity – ATLIX
Equity holders of other stapled entity – ATLAX
(as non-controlling interest/parent entity)
Stapled securityholders
Other comprehensive (loss)/income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Gain/(loss) on cash flow hedges
Other comprehensive (loss)/income
Total comprehensive (loss)/income
Total comprehensive (loss)/income attributable to:
Equity holders of the parent entity – ATLIX
Equity holders of other stapled entity – ATLAX
(as non-controlling interest/parent entity)
Stapled securityholders
(Loss)/profit per share attributable to ATLIX/ATLAX
shareholders
Basic (loss)/profit per share attributable to:
ATLIX (as parent entity)
ATLAX (as non-controlling interest)
Basic (loss)/profit per ALX stapled security
Diluted (loss)/profit per share attributable to:
ATLIX (as parent entity)
ATLAX (as non-controlling interest)
Diluted (loss)/profit per ALX stapled security
106,650
175,192
13,349
2.1.1
2.1.2
2.1.3
3.2.2
2.4.1
–
106,650
(279,145)
(87,085)
196,086
(63,494)
7,689
(55,805)
–
175,192
(336,781)
(112,311)
254,874
(19,026)
9,205
(9,821)
–
13,349
(20,891)
(1,811)
(30,338)
(39,691)
–
9,977
118
10,095
(16,053)
(37)
(20,907)
(26,902)
–
(39,691)
(26,902)
(16,114)
17,081
–
–
(39,691)
(55,805)
(26,902)
(9,821)
(39,691)
(39,691)
(26,902)
(26,902)
5.4.2
(110,976)
25,287
(85,689)
(141,494)
(8,328)
(25,287)
(33,615)
(43,436)
(9,545)
–
(9,545)
(49,236)
981
–
981
(25,921)
(92,258)
(17,515)
–
–
(49,236)
(141,494)
(25,921)
(43,436)
(49,236)
(49,236)
(25,921)
(25,921)
Cents
Cents
Cents
Cents
2.3
2.3
2.3
2.3
(1.8)
–
(6.1)
(1.7)
–
(6.0)
2.5
–
(1.4)
2.5
–
(1.4)
–
(4.3)
(4.3)
–
(4.3)
(4.3)
–
(3.9)
(3.9)
–
(3.9)
(3.9)
The above Consolidated Statements of Comprehensive Income should be read in conjunction with the accompanying notes.
68 | ATLAS ARTERIA ANNUAL REPORT 2020
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Current assets
Cash and cash equivalents
Other assets
Total current assets
Non-current assets
Restricted cash
Intangible assets – Tolling Concessions
Investments in associates
Goodwill
Property plant and equipment
Other assets
Total non-current assets
Total assets
Current liabilities
Other liabilities
Debt at amortised cost
Derivative financial instruments
Total current liabilities
Non-current liabilities
Debt at amortised cost
Deferred tax liabilities
Other liabilities
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
Equity
Equity attributable to securityholders of the parent – ATLIX
Contributed equity
Reserves
Accumulated losses
ATLIX securityholders’ interest
Equity attributable to other stapled securityholders – ATLAX
Contributed equity
Reserves
Accumulated losses
Other stapled securityholders’ interest
Total equity
ALX
ATLAX Group
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
Note
3.1
4.3
3.1
4.1
3.2
4.2
4.3
4.4
5.1
5.4
5.1
2.4
4.4
5.4
5.2
5.3
5.2
5.3
260,341
1,450,221
7,301
143,390
267,642
1,593,611
224,089
253,904
2,064,339
2,438,598
52,130
5,598
57,728
–
–
48,612
2,094
50,706
–
–
2,635,472
1,363,829
104,685
144,589
14,091
13,267
136
14,054
11,249
248
4,951,394
4,081,882
5,219,036
5,675,493
–
2,508
22
107,215
164,943
–
2,323
51
146,963
197,669
(16,300)
(53,212)
(2,515)
(72,027)
(25,927)
(45,181)
(33,768)
(5,494)
(3,377)
–
–
–
–
(104,876)
(5,494)
(3,377)
(1,470,960)
(2,129,328)
(40,395)
(38,871)
(12,332)
(50,541)
(34,350)
(12,803)
(1,562,558)
(2,227,022)
(1,634,585)
(2,331,898)
–
–
–
–
(1,600)
(1,756)
–
(1,600)
(7,094)
–
(1,756)
(5,133)
3,584,451
3,343,595
157,849
192,536
3,747,750
3,275,591
(13,607)
(307,541)
154,283
(278,815)
3,426,602
3,151,059
–
–
–
–
–
–
–
–
202,075
21,834
(66,060)
157,849
187,571
(6,642)
11,607
192,536
3,584,451
3,343,595
202,075
21,834
(66,060)
157,849
157,849
187,571
(6,642)
11,607
192,536
192,536
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes.
The financial information was approved by the ATLIX Board of Directors on 24 February 2021 and as required by Bermuda
regulations was signed on its behalf by:
Jeffrey Conyers
Atlas Arteria International Limited
Hamilton, Bermuda
Caroline Foulger
Atlas Arteria International Limited
Hamilton, Bermuda
ATLAS ARTERIA ANNUAL REPORT 2020 | 69
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
ALX
Attributable to ATLIX securityholders
Contributed
equity
$’000
Reserves
$’000
Accumulated
Losses
$’000
Attributable to
ATLAX
securityholders
$’000
Total
$’000
Total ALX
equity
$’000
Total equity at 1 January 2020
3,275,591
154,283
(278,815)
3,151,059
192,536
3,343,595
Profit/(loss) for the year
Exchange differences on translation
of foreign operations
Change in fair value of the cash
flow hedges
Settlement of the hedging instrument
Total comprehensive income/(expense)
Transactions with equity holders in their
capacity as equity holders:
Issue of securities during the period
(refer to note 5.2)
Transaction costs associated with issue
of securities (refer to note 5.2)
Employee Performance rights
(refer to notes 5.2 and 5.3)
Dividends paid (refer to note 2.2)
Total equity at 31 December 2020
–
–
–
–
–
–
(16,114)
(16,114)
(39,691)
(55,805)
(101,431)
24,716
571
–
–
–
(76,144)
(16,114)
(101,431)
(9,545)
(110,976)
24,716
571
(92,258)
–
–
24,716
571
(49,236)
(141,494)
481,036
(9,738)
–
–
–
–
(9,738)
–
861
–
1,134
–
1,995
–
(105,492)
(105,492)
481,036
13,964
495,000
516
17
52
–
(9,222)
17
2,047
(105,492)
382,350
472,159
3,747,750
(91,746)
(13,607)
(12,612)
367,801
14,549
(307,541)
3,426,602
157,849
3,584,451
Other equity transactions (refer to note 5.3)
–
(92,880)
92,880
ALX
Attributable to ATLIX securityholders
Contributed
equity
$’000
Reserves
$’000
Accumulated
Losses
$’000
Attributable to
ATLAX
securityholders
$’000
Total
$’000
Total ALX
equity
$’000
Total equity at 31 December 2018
1,995,994
190,155
(87,522)
2,098,627
229,879
2,328,506
Adjustment on adoption of AASB 16
Adjustment to prior period
–
–
–
(2,615)
(1,219)
(56,821)
(1,219)
(59,436)
(220)
–
(1,439)
(59,436)
Total equity at 1 January 2019 (restated)
1,995,994
187,540
(145,562)
2,037,972
229,659
2,267,631
Profit/(loss) for the year
Exchange differences on translation
of foreign operations
Change in fair value of hedging
instrument
Total comprehensive income/(expense)
Transactions with equity holders in their
capacity as equity holders:
Issue of securities during the year
(refer to note 5.2)
Transaction costs associated with issue
of securities (refer to note 5.2)
Employee Performance rights
(refer to notes 5.2 and 5.3)
Capital return (refer to note 2.2)
Dividends paid (refer to note 2.2)
Total equity at 31 December 2019
–
–
–
–
–
17,081
17,081
(26,902)
(9,821)
(9,309)
(25,287)
(34,596)
–
–
17,081
(9,309)
981
(8,328)
(25,287)
(17,515)
–
(25,921)
(25,287)
(43,436)
1,304,255
45,745
1,350,000
(25,449)
(2,217)
(27,666)
1,304,255
(25,449)
–
–
791
1,339
–
–
–
–
–
–
1,279,597
3,275,591
2,130
–
(68)
(53,295)
(1,367)
2,062
(53,295)
(151,701)
(150,334)
(150,334)
–
–
1,339
(150,334)
1,130,602
(11,202)
1,119,400
154,283
(278,815)
3,151,059
192,536
3,343,595
The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.
70 | ATLAS ARTERIA ANNUAL REPORT 2020
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
ATLAX Group
Total equity at 1 January 2020
Loss for the year
Exchange differences on translation of foreign operations
Total comprehensive income
Transactions with equity holders in their capacity as equity holders:
Employee performance rights (refer to note 5.2)
Other equity transactions (refer to note 5.3)
Issue of securities during the year
Transaction costs associated with issue of securities
Total equity at 31 December 2020
ATLAX Group
Total equity at 31 December 2018
Adjustment on adoption of AASB 16
Total equity at 1 January 2019 (restated)
Loss for the year
Exchange differences on translation of foreign operations
Total comprehensive income/(expense)
Transactions with equity holders in their capacity as equity holders:
Issue of securities during the year
Transaction costs associated with issue of securities
Employee performance rights (refer to notes 5.2 and 5.3)
Capital return (refer to note 2.2)
Dividends paid (refer to note 2.2)
Total equity at 31 December 2019
Attributable to ATLAX securityholders
Contributed
equity
$’000
Reserves
$’000
Accumulated
Losses
$’000
187,571
(6,642)
–
–
–
24
–
13,964
516
14,504
202,075
–
(9,545)
(9,545)
11,607
(39,691)
–
(39,691)
28
–
37,993
(37,976)
–
–
–
–
38,021
21,834
(37,976)
(66,060)
Total
$’000
192,536
(39,691)
(9,545)
(49,236)
52
17
13,964
516
14,549
157,849
Attributable to ATLAX securityholders
Contributed
equity
$’000
Reserves
$’000
Accumulated
Losses
$’000
Total
$’000
197,311
(7,528)
40,096
229,879
–
–
197,311
(7,528)
–
–
–
45,745
(2,217)
27
(53,295)
–
(9,740)
187,571
–
981
981
–
–
(95)
–
–
(95)
(6,642)
(220)
39,876
(26,902)
–
(220)
229,659
(26,902)
981
(26,902)
(25,921)
–
–
–
–
(1,367)
(1,367)
11,607
45,745
(2,217)
(68)
(53,295)
(1,367)
(11,202)
192,536
The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.
ATLAS ARTERIA ANNUAL REPORT 2020 | 71
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS CONSOLIDATED STATEMENTS OF CASH FLOWS
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Note
Cash flows from operating activities
Toll revenue received (net of transaction processing fees)
93,368
146,332
Interest received
Other income received
Property taxes paid
Manager’s and adviser’s base fees paid
Payments to suppliers and employees (inclusive of GST/VAT)
Net income taxes (paid)/received
Net cash flows from operating activities
Cash flows from investing activities
Return from associates
Payment for purchase of investments
Payments to suppliers associated with the purchase of investments
Other investments
Additions to tolling concessions (IFRIC 12)
Purchase of fixed assets
Sale of fixed assets
Net cash flows from investing activities
Cash flows from financing activities
3,186
1,760
(5,249)
(6,829)
(46,903)
(4)
6,824
1,245
(6,091)
(31,009)
(40,942)
22
39,329
76,381
310,866
238,247
(1,272,692)
(2,712)
(1,593)
(9,104)
(1,438)
–
–
(54)
–
(15,424)
(328)
16
–
192
8,680
–
(94)
(15,439)
(4)
(6,665)
–
–
–
(266)
–
(887)
–
–
1,652
6,519
–
(1,164)
(14,800)
22
(7,771)
–
–
(50)
–
–
(76)
–
(126)
(976,673)
222,457
(1,153)
Repayment of debt and interest (including transaction costs)
(632,748)
(105,291)
–
–
Proceeds from issue of securities (net of transaction costs)
5.2
483,936
1,324,176
12,732
44,854
Transfer (to)/from restricted cash
Capital return
Dividends paid
Lease principal payments
Loan repayment to related parties
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate movements on cash and cash equivalents
Cash and cash equivalents at the end of the year
8,744
–
(50,054)
(53,295)
(105,492)
(151,701)
(1,061)
–
–
–
(246,621)
963,835
(1,183,965)
1,262,673
1,450,221
186,468
(5,915)
1,080
260,341
1,450,221
–
–
–
(197)
–
12,535
4,717
48,612
(1,199)
52,130
–
(53,295)
(1,367)
–
53,633
43,825
35,928
12,461
223
48,612
The above Consolidated Statements of Cash Flows should be read in conjunction with the accompanying notes.
72 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS
Introduction
1
Atlas Arteria – Stapled security
An Atlas Arteria (‘ALX’) stapled security comprises one Atlas Arteria International Limited (‘ATLIX’) share ‘stapled’ to one Atlas
Arteria Limited (‘ATLAX’) share to create a single listed security traded on the Australian Securities Exchange (‘ASX’). The stapled
securities cannot be traded or dealt with separately.
AASB 3 Business Combinations and AASB 10 Consolidated Financial Statements require one of the stapled entities of a stapled
structure to be identified as the parent entity for the purpose of preparing a consolidated Financial Report. In accordance with this
requirement, ATLIX has been identified as the parent entity of the consolidated group comprising ATLIX and its controlled entities
(‘ATLIX Group’) and ATLAX and its controlled entities (‘ATLAX Group’), together comprising ‘Atlas Arteria’, ‘ALX’ or ‘the Groups’.
As permitted by ASIC Class Order 13/1050 and ASIC Corporations (Stapled Group Reports) Instrument 2015/838, these reports
consist of the Financial Report of ATLIX Group at the end of and during the year and separately the Financial Report of the ATLAX
Group at the end of and during the year.
The Financial Report of Atlas Arteria should be read in conjunction with the separate Financial Report of the ATLAX Group
presented in these reports for the year ended 31 December 2020.
Basis of preparation
Both ATLIX and ATLAX are for-profit entities for the purpose of preparing the Financial Reports.
The Financial Reports were authorised for issue by the Directors of the ATLIX Board and the ATLAX Board (together, the ‘Boards’)
on 24 February 2021 and 25 February 2021 respectively. The Boards have the power to amend and reissue the Financial Reports.
The Financial Reports are general purpose financial reports that:
− have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting
Standards Board (‘AASB’) and the Corporations Act 2001 (where applicable).
− have also been prepared in accordance with and comply with International Financial Reporting Standards (‘IFRS’) as issued by
the International Accounting Standards Board (‘IASB’).
− include the assets and liabilities of all subsidiaries as at 31 December 2020 and the results of the subsidiaries for the year then
ended. Inter-entity transactions with, or between, subsidiaries are eliminated in full on consolidation.
− have been prepared under the historical cost conventions except for certain assets and liabilities, which have been measured
at fair value.
− are presented in Australian dollars with all values rounded to the nearest thousand dollars unless otherwise stated, in
accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191.
Significant accounting policies and key judgements and estimates are contained in shaded text and included in the relevant note.
These policies have been consistently applied to all periods presented, unless otherwise stated. Refer to note 7.5 for other
accounting policies which have not been presented along with their respective notes.
New and amended standards adopted by the Groups
There have been no new accounting standards adopted by the Groups in the year ended 31 December 2020.
Critical accounting estimates and judgements
The preparation of the Financial Reports in accordance with Australian Accounting Standards requires the use of certain critical
accounting estimates. It also requires the Directors to exercise judgement in the process of applying the accounting policies.
Estimates and judgements are continually evaluated and are based on historic experience and other factors, including reasonable
expectations of future events. The Directors believe the estimates used in the preparation of the Financial Reports are reasonable.
Actual results in the future may differ from those reported.
Significant judgements made in applying accounting policies, estimates and assumptions that have a risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next year are discussed in the following notes:
− Control assessment (Note 3.2 and 6.2)
− Impairment of assets and associates (Note 3.2)
− Intangible assets – Tolling concessions (Note 4.1)
ATLAS ARTERIA ANNUAL REPORT 2020 | 73
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 2 Financial performance
2.1 (Loss)/profit for the year
Revenue recognition
Revenue and other income is recognised as follows:
Toll revenue
Toll revenue from customers is earned as performance obligations are satisfied. A singular performance obligation has been
assessed as the use of the road, and the transaction price, which is calculated based on passing through toll points, is fully
allocated to this performance obligation. Toll revenue is recognised at the time the customers use the road.
Other revenue
Other revenue from customers consists of revenue earned in respect to rental income from cell towers and income from
advertising hoardings on the toll road. Other revenue is recognised over the period of the contract in accordance with the
contracts governing these services as performance obligations are satisfied.
Interest income
Interest income is brought to account on an accruals basis.
Construction revenue
Revenue for the construction of service concession infrastructure assets is recognised in line with the progress of construction
services provided over time. Progress is measured by reference to costs incurred to date.
2.1.1 Revenue and other income
The (loss)/profit from operations before income tax includes the following specific items of income and expense:
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Revenue from operations:
Toll revenue
Other income
Construction revenue from road development activities
Interest income
95,253
150,368
1,030
8,273
2,094
838
16,557
7,429
–
13,153
–
196
Total revenue and other income from operations
106,650
175,192
13,349
Other income from operations:
Reversal of impairment on financial assets
Total other income from operations
–
–
–
–
–
–
–
9,453
–
524
9,977
118
118
Total revenue and other income from operations
106,650
175,192
13,349
10,095
74 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS 2.1.2 Operating expenses
Operating expenses
Amortisation of tolling concession
Cost of operations:
Toll road maintenance expenses
Other operating expenses
Employment costs
Total cost of operations
Consulting and administration fees
Manager’s and adviser’s base fees
Net foreign exchange loss
Impairment loss on goodwill (refer to note 4.2)
Impairment loss on tolling concession (refer to note 4.1)
Construction costs from road development activities
Other expenses
Depreciation and amortisation
Total operating expenses
2.1.3 Finance costs
Interest on debt
Mark to market (gain)/loss on derivatives
Net (gain)/loss on cash flow hedge ineffectiveness
Amortisation of issue cost on borrowings from financial
institutions (refer to note 5.1)
Net foreign exchange (gain)/loss
Other interest
Total finance costs
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
66,439
69,273
12,020
8,711
21,660
42,391
5,461
2,051
–
–
143,896
8,273
9,634
1,000
11,737
9,838
20,209
41,784
5,655
28,236
994
66,028
99,401
16,557
7,843
1,010
279,145
336,781
–
–
89
10,883
10,972
3,093
–
–
–
–
–
6,507
319
20,891
–
–
134
7,705
7,839
3,304
792
30
–
–
–
3,777
311
16,053
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
96,239
(1,212)
(420)
802
(9,745)
1,421
87,085
100,398
2,458
5,294
2,821
–
1,340
112,311
–
–
–
–
1,777
34
1,811
–
–
–
–
–
37
37
ATLAS ARTERIA ANNUAL REPORT 2020 | 75
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 2.2 Distributions
A distribution payable is recognised for the amount of any distribution declared, or publicly recommended by the Directors
on or before the end of the year but not distributed at balance date.
Distributions paid
Dividend paid on 5 October 2020 (a)
Dividend paid on 4 October 2019 (b)
Distribution paid on 5 April 2019 (c)
Total distributions paid
Distributions paid
Dividend per security paid on 5 October 2020 (a)
Dividend per security paid on 4 October 2019 (b)
Distribution per security paid on 5 April 2019 (c)
Total distributions paid
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
105,492
–
–
105,492
–
102,505
102,491
204,996
–
–
–
–
–
–
54,662
54,662
Cents per
stapled
security
Cents per
stapled
security
Cents per
stapled
security
Cents per
stapled
security
11.0
–
–
11.0
–
15.0
15.0
30.0
–
–
–
–
–
–
8.0
8.0
(a) The dividend paid on 5 October 2020 comprised of an ordinary dividend of 11.0 cps.
(b) The dividend paid on 4 October 2019 comprised of an ordinary dividend of 15.0 cps.
(c) The distribution paid on 5 April 2019 comprised a capital return of 7.8 cps and an unfranked Australian ordinary dividend of 0.2 cps paid by ATLAX and an ordinary
dividend of 7.0 cps paid by ATLIX.
76 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS 2.3 Earnings per stapled security
Basic earnings per stapled security
Basic earnings per stapled security is determined by dividing the profit attributable to securityholders by the weighted average
number of securities on issue during the year.
Diluted earnings per stapled security
Diluted earnings per stapled security is calculated by adjusting basic earnings per stapled security for the effects of all dilutive
potential ordinary stapled securities.
Basic earnings/(loss) per ATLIX/ATLAX share
Diluted earnings/(loss) per ATLIX/ATLAX share
Attributable to ATLIX
equity holders
Attributable to ATLAX
equity holders
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
(1.75)
(1.74)
$’000
2.45
2.44
$’000
(4.30)
(4.30)
$’000
(3.85)
(3.85)
$’000
Earnings/(loss) used in the calculation of basic and diluted profit/(loss)
per ATLIX/ATLAX share
(16,114)
17,081
(39,691)
(26,902)
Number
Number
Number
Number
Weighted average number of shares used in calculation of basic
earnings/(loss) per ATLIX/ATLAX share
922,912,181
698,100,080
922,912,181
698,100,080
Adjustment for employee performance rights (a)
1,028,860
590,615
1,028,860
590,615
Weighted average number of shares used in calculation of diluted
earnings/(loss) per ATLIX/ATLAX share
923,941,041
698,690,695
923,941,041
698,690,695
(a) Diluted earnings per ALX stapled security is adjusted for employee performance rights. Refer to note 7.4 for details.
The basic (loss)/profit per ALX stapled security for the year ended 31 December 2020 was (6.05) cps (2019: (1.40) cps) and the
diluted (loss)/profit per ALX stapled security for the year ended 31 December 2020 was (6.04) cps (2019: (1.41) cps), using ALX
(loss)/profit attributable to ALX stapled security holders of ($55.8) million (2019: ($9.8) million).
2.4 Income Tax
The income tax expense or benefit for the year is the tax payable on the current year’s taxable income based on the national
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences between the tax bases of assets and liabilities and their carrying amounts in the Financial Reports, and to unused
tax losses.
Deferred income tax is determined using the balance sheet method, being the temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the Financial Reports. Deferred tax assets are recognised for
deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to
utilise those temporary differences and losses. However, the deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the time of transaction affects
neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been
enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled. Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same
taxation authority.
Under current Bermudan law, ATLIX will not be subject to any income, withholding or capital gains taxes in Bermuda.
Controlled entities of ATLIX that are subject to taxes in their jurisdictions recognise income tax using the balance sheet
approach of tax effect accounting.
ATLAS ARTERIA ANNUAL REPORT 2020 | 77
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS
2.4.1 Income tax (benefit)/expense
This note provides an analysis of the Groups’ income tax expense, shows what amounts are recognised directly in equity and how
the tax expense is affected by non-assessable and non-deductible items. It also explains significant estimates made in relation
to the Groups’ tax position.
(a) Income tax (benefit)/expense
Income Tax expense
Current tax
Deferred tax
Total income tax (benefit)/expense
(b) Reconciliation of income tax (benefit)/expense to prima facie tax payable
(Loss)/profit from operations before income tax
Prima facie income tax on (loss)/profit at the Australian tax rate of 30%
Impact of different tax rates of operations in jurisdictions other than
Australia
Tax effect of amounts that are not deductible/(taxable)
in calculating taxable income:
Non-assessable income
Non-deductible expenditure
Share of net (profits)/losses of investments accounted for using
the equity method
Temporary differences not brought to account
Deferred tax assets on taxable losses not brought to account
Aggregate income tax (benefit)/expense
(c) Tax losses
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
14
(7,703)
(7,689)
(1,972)
(7,233)
(9,205)
–
–
–
–
–
–
(63,494)
(19,047)
(19,026)
(5,707)
(39,691)
(11,907)
(26,902)
(8,071)
6,071
18,683
1,766
19
–
63,794
(37)
50,029
–
695
(58,826)
(76,462)
9,101
(8,107)
8,426
(7,689)
(596)
4,885
(9,205)
423
(78)
–
(37)
351
6,272
109
1,357
–
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit of unused tax losses
377,510
97,972
285,589
75,120
298,010
78,658
284,636
74,939
Neither Atlas Arteria nor the ATLAX Group recognised any current or deferred tax that was debited or credited directly to equity.
Tax losses that arose in the U.S. on or before 31 December 2017 of US$158.6 million expire after 20 years and tax losses that arose
in Luxembourg from 1 January 2017 of € 43.1 million expire after 17 years.
2.4.2 Deferred tax assets and liabilities
The Groups have no deferred tax assets. The movement in the balance of deferred tax liabilities (‘DTL’) is as follows:
Deferred tax liabilities
Opening balance at 1 January
Amortisation of deferred tax liabilities
Impairment impact on deferred tax liabilities
Foreign exchange movement
Closing balance at 31 December
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
(50,541)
(57,709)
1,060
5,754
3,332
1,558
5,675
(65)
(40,395)
(50,541)
–
–
–
–
–
–
–
–
–
–
During 2020 the impairment recognised on Dulles Greenway of $143.9 million (2019: $165.4 million) resulted in a $5.8 million
(2019: $5.7 million) decrease in the DTL.
78 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS 2.5 Segment information
Operating segments are reported in a manner consistent with the internal reporting based on a proportionately consolidated
basis with a focus on revenue down to EBITDA and EBITDA margin provided to the chief operating decision makers. The chief
operating decision makers are responsible for allocating resources and assessing performance of the operating segments.
2.5.1 Description of segments
Management has determined the operating segments based on the reports reviewed by the Boards. The Boards do not manage
the day-to-day activities of the business. The Directors have appointed a management team to run and manage the ongoing
operations of the business.
Management considers the business from the aspect of each of the businesses and have identified four operating segments
for Atlas Arteria and one operating segment for the ATLAX Group. The segments of Atlas Arteria are the investments in APRR,
ADELAC, Dulles Greenway and Warnow Tunnel. The only segment for the ATLAX Group is the investment in Dulles Greenway.
2.5.2 Segment information
The proportionally consolidated segment information for the reportable segments for the year ended 31 December 2020, based
on Atlas Arteria’s economic ownership interest is as follows:
ALX
Year ended
APRR
$’000
ADELAC
$’000
Dulles
Greenway
$’000
Warnow
Tunnel
$’000
Total ALX
$’000
Total ATLAX
$’000
Segment revenue
31-Dec-20
1,115,693
Segment expenses
Segment EBITDA
EBITDA margin
31-Dec-19
1,051,601
31-Dec-20
31-Dec-19
31-Dec-20
31-Dec-19
31-Dec-20
31-Dec-19
(320,709)
(276,836)
794,984
774,765
71%
74%
21,351
22,901
(3,928)
(4,164)
17,423
18,737
82%
82%
74,814
129,088
(21,367)
(24,556)
53,447
104,532
71%
81%
21,197
1,233,055
22,063
1,225,653
(6,126)
(5,441)
15,071
16,622
71%
75%
(352,130)
(310,997)
880,925
914,656
71%
75%
10,050
17,340
(2,870)
(3,299)
7,180
14,041
71%
81%
The segment revenue disclosed in the table above primarily relates to toll revenue generated by businesses from external customers.
The segment expenses disclosed in the table above relate directly to costs associated with the operation of that segment. The
segment assets and liabilities are disclosed in note 3.2.3 with the exception of Warnow Tunnel whose assets are $230.8 million
(2019: $212.5 million) and liabilities are $220.4 million (2019: $219.4 million).
A reconciliation of the Groups’ segment revenue and EBITDA to its total revenue and profit from operations before income tax
is provided as follows:
Reconciliation of segment revenue to revenue
Segment revenue
Revenue attributable to non-consolidated investments
Construction revenue from road development activities
Unallocated revenue and other income
Total revenue and other income from operations
Reconciliation of segment EBITDA to profit/(loss) before income tax
Segment EBITDA
EBITDA attributable to non-consolidated investments
Construction expense from road development activities
Impairment of Dulles Greenway
Unallocated revenue
Unallocated expenses
Finance costs
Share of net profits/(losses) of investments accounted for using
the equity method
Profit/(loss) from operations before income tax
ALX
ATLAX Group
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
1,233,055
1,225,653
(1,137,044)
(1,074,502)
8,273
2,366
16,557
7,484
106,650
175,192
880,925
(812,407)
(8,273)
(143,896)
2,366
(91,210)
(87,085)
196,086
(63,494)
914,656
(793,502)
(16,557)
(165,429)
7,484
(108,241)
(112,311)
254,874
(19,026)
10,050
(10,050)
–
13,349
13,349
7,180
(7,180)
–
–
13,349
(20,891)
(1,811)
(30,338)
(39,691)
17,340
(17,340)
–
10,095
10,095
14,041
(14,041)
–
–
10,095
(16,053)
(37)
(20,907)
(26,902)
ATLAS ARTERIA ANNUAL REPORT 2020 | 79
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 3 Cash and investments
3.1 Cash, cash equivalents and restricted cash
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and other short term and
highly liquid investments that are readily convertible to cash with insignificant risk of changes in value. Restricted cash
includes funds held in escrow, funds backing guarantees or amounts otherwise not available to meet short term commitments
of the Groups and is classified as a non-current asset.
Current
Cash and cash equivalents (a)
Non-current
Restricted cash
ALX
ATLAX Group
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
260,341
260,341
1,450,221
1,450,221
52,130
52,130
48,612
48,612
224,089
224,089
253,904
253,904
–
–
–
–
(a) At 31 December 2019, cash on hand included $1,324.2 million of proceeds from the equity raise which was used to fund the APRR Transaction which completed
on 2 March 2020.
3.1.1 Cash and cash equivalents
During the year cash on hand was held in bank accounts earning money market rates of interest between -2.71% and 1.66%
(2019: -1.75% to 2.51%) per annum.
Cash equivalents include TRIP II’s money market deposits which mature within 30 days and paid interest between 0.1% and 1.64%
(2019: 1.37% and 2.44%) per annum.
3.1.2 Restricted cash
This comprises funds held in escrow pursuant to the TRIP II bond indenture agreements, Warnow Tunnel loan agreements and
cash-backed guarantees provided in relation to Warnow Tunnel. Discussion of the Groups’ policies concerning the management
of credit risk can be found in note 5.4.4.
80 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS 3.2 Investments accounted for using the equity method
Associates
Associates are entities over which the Groups have significant influence but not control. Investments in associates are
accounted for using the equity method of accounting, after initially being recognised at cost. The Groups’ investment
in associates includes the fair value of goodwill (net of any accumulated impairment loss) identified on acquisition.
The Groups’ share of their associates’ post-acquisition profits or losses is recognised in profit or loss. The cumulative
post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from
associates reduce the carrying amount of the investment.
When the Groups’ share of losses in an associate equals or exceeds its interest in the associate, including any long term
interests that, in substance, form part of the Groups’ net investment in the associate, the Groups do not recognise further
losses, unless they have incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Groups and their associates are eliminated to the extent of the Groups’ interest
in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the
policies adopted by the Groups.
Impairment of assets and reversal of impairment
An investment accounted for using the equity method is assessed for impairment whenever there are indications that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount.
The recoverable amount of the asset is determined as the higher of the fair value less costs of disposal and the value in use.
If it is not possible to determine a recoverable amount for the individual assets, the assets are assessed together in the
smallest group of assets which generate cash inflows that are largely independent of those from other assets or groups
of assets.
Discounted cash flow analysis is the methodology applied in determining recoverable amount. Discounted cash flow analysis
is the process of estimating future cash flows that are expected to be generated by an asset and discounting these to their
present value by applying an appropriate discount rate. The discount rate applied to the cash flows of a particular asset
is reflective of the uncertainty associated with the future cash flows. Periodically, independent traffic forecasting experts
provide a view on the most likely level of traffic to use the toll road having regard to a wide range of factors including
development of the surrounding road network and economic growth in the traffic corridor.
Assets (other than goodwill) that have suffered an impairment are reviewed for possible reversal of the impairment at the
end of each reporting period. AASB 136 Impairment of Assets states that impairment losses shall be reversed if, and only if,
there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss
was recognised and the estimated service potential of the asset has increased. The impairment loss is not reversed just
because of the passage of time, even if the recoverable amount of the asset becomes higher than its carrying value.
Investment in associates and joint venture – equity method
ALX
ATLAX Group
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
2,635,472
1,363,829
2,635,472
1,363,829
104,685
104,685
144,589
144,589
ATLAS ARTERIA ANNUAL REPORT 2020 | 81
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS Information relating to material associates and joint arrangements is set out below:
3.2.1 Carrying amounts
Name of
Entity (a), (e)
Country of
Incorporation/
Principal Place
of Business
MAF2 (b)
Luxembourg
TRIP II (c), (d)
USA
Principal Activity
Investment in
toll road network
located in the
east of France
(APRR and
ADELAC)
Investment in the
Dulles Greenway
toll road located
in northern
Virginia, USA
ALX Economic
interest
As at
31 Dec 2020
and
31 Dec 2019
%
ALX
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
ATLAX
Economic
Interest
As at
31 Dec 2020
and
31 Dec 2019
%
ATLAX Group
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
62.3/50.0
2,635,472
1,363,812
-/-
–
–
-/-
–
–
13.4/13.4
104,685
144,572
(a) All associates and joint arrangements have 31 December year end reporting requirements except for MAF2 which has a 31 March year end.
(b) Atlas Arteria’s investment in MAF2 is classified as an associate as any decision made with regard to the relevant activities requires 85% of the voting
members to proceed.
(c) The ATLAX Group has a 13.4% interest in TRIP II, the concessionaire for Dulles Greenway is accounted for as an equity accounted associate. Atlas Arteria has a 100%
estimated economic interest in TRIP II after combining ATLAX Group’s 13.4% equity interest with ATLIX Group’s 86.6% economic interest. Accordingly, TRIP II is
accounted for as a subsidiary of Atlas Arteria.
(d) TRIP II is in ‘lockup’ under its debt documents, meaning that it is currently unable to make distributions to Atlas Arteria or the ATLAX Group.
(e) Chicago Skyway Partnership (‘CSP’) and Indiana Toll Road Partnership (‘ITRP’) were liquidated during the year.
3.2.2 Movement in carrying amounts
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$'000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Carrying amount at the beginning of the year (a)
1,363,829
1,510,534
144,589
164,644
Adjustment on adoption of AASB 16
Share of profits/(losses) after income tax
Distributions received/receivable
Liquidation of CSP and ITRP
Additional investment in MAF2
Transaction costs
Foreign exchange movement
Impairment of asset (b)
–
196,086
(137,592)
(17)
1,066,253
206,235
(59,322)
–
–
254,874
(375,722)
–
–
–
(25,857)
–
Carrying amount at the end of the year
2,635,472
1,363,829
–
(12,037)
(220)
(4,401)
–
(17)
–
–
–
–
–
–
(11,250)
(16,600)
104,685
941
(16,375)
144,589
(a) Historically there has been an understatement of the accumulated amortisation charged against the tolling concession assets of the associate. The cumulative
amount of $59.4 million has been corrected in the opening balance sheet for 2019. The impact was not material in any individual year and has resulted in a decrease
in Investments in Associates and an increase in Accumulated Losses.
(b) Impairment of asset includes an impairment on Dulles Greenway of $22.4 million (2019: $22.1 million) (refer to notes 4.1 & 4.2) offset by the impact of the deferred
tax liability $5.8 million (2019: $5.7 million).
82 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS
3.2.3 Summarised financial information for material associates
The following tables summarise financial information for those associates that are material to the Atlas Arteria and ATLAX Group.
The information disclosed reflects the amounts presented in the Financial Reports of those relevant entities and not Atlas Arteria’s
or ATLAX Group’s share of those amounts. Additional disclosures at the end of the tables reflect the adjustments required for
relevant disclosure in the Atlas Arteria or ATLAX Group accounts.
Summarised Statement of Financial Position
Total current assets
Total non-current assets
Total current liabilities
Total non-current liabilities
Net assets
Reconciliation to carrying amounts:
Opening net assets
Profit/(loss) for the period
Distributions paid
Foreign exchange and other equity movements
Closing net assets
Atlas Arteria’s share in %
Atlas Arteria’s share of net assets in $
ATLAX Group’s share in %
ATLAX Group’s share of net assets in $
Atlas Arteria’s carrying amount
Accumulated prior year impairment of asset
Impairment of asset (b)
ATLAX Group’s carrying amount
MAF2 (a)
TRIP II
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$'000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
1,250,831
1,683,670
73,143
79,173
9,526,182
9,787,199
2,359,625
2,631,409
(1,670,035)
(2,843,063)
(79,567)
(72,243)
(7,548,378)
(6,887,567)
(1,338,848)
(1,440,195)
1,558,600
1,740,239
1,014,353
1,198,144
1,740,239
1,738,924
1,198,144
1,225,548
331,300
(220,924)
(292,015)
509,666
(751,322)
242,971
(89,606)
(32,763)
–
(94,185)
–
5,359
1,558,600
1,740,239
1,014,353
1,198,144
62.3%
50.0%
970,696
870,260
–
–
–
–
–
–
–
–
13.4%
13.4%
136,258
160,947
2,635,472
1,363,812
–
–
–
–
–
–
–
(14,973)
(16,600)
104,685
–
–
(16,375)
144,572
(a) MAF2 proportionately consolidates the results of APRR and ADELAC. On 2 March 2020 the ATLIX Group completed the APRR Transaction, acquiring a further
6.14% indirect interest in APRR and ADELAC. Post completion ATLIX Group has a 31.14% indirect interest in APRR (2019: 25.00%) and 31.17% indirect interest
in ADELAC (2019: 25.03%) via a 62.29% (2019: 50.01%) interest in MAF2.
(b) Impairment of asset includes an impairment of $22.4 million (2019: $22.1 million) (refer to notes 4.1 & 4.2) offset by the impact of the deferred tax liability
$5.8 million (2019: $5.7 million).
Summarised Statement of Comprehensive Income
Revenue
Profit/(loss) for the year
Atlas Arteria’s share
ATLAX Group’s share
Atlas Arteria’s distributions received
ATLAX Group’s distributions received
(a) MAF2 proportionately consolidates the results of APRR and ADELAC.
MAF2 (a)
TRIP II
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
2,093,178
2,451,248
331,300
196,086
–
509,666
254,874
83,087
(89,606)
–
145,645
(32,763)
–
–
(12,037)
(4,401)
137,592
375,722
–
–
–
–
–
–
ATLAS ARTERIA ANNUAL REPORT 2020 | 83
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 4 Other balance sheet assets and liabilities
4.1 Intangible assets – Tolling concessions
Intangible assets – Tolling concessions
Tolling concessions are intangible assets and represent the right to levy tolls in respect of controlled motorways. Tolling
concessions relating to the non-controlled investments are recognised as a component of the investments accounted for using
the equity method.
Tolling concessions have a finite useful life by the terms of the concession arrangement and are carried at cost which
represents the fair value of the consideration paid on acquisition less accumulated amortisation and impairment charges.
Amortisation is calculated using the straight line method to allocate the cost of tolling concessions over their estimated useful
lives which are as follows:
Dulles Greenway
Warnow Tunnel
APRR
ADELAC
Estimated useful life
Amortisation basis
Period to February 2056
Period to September 2053
Period to November 2035
Period to December 2060
Straight line basis
Straight line basis
Straight line basis
Straight line basis
There has been no change to the estimated useful life during the year.
In relation to APRR and ADELAC, the tolling concessions in relation to these non-controlled investments are not recognised
on the statement of financial position but instead form part of investments accounted for using the equity method. The
amortisation of tolling concessions in relation to these non-controlled investments is included in the share of net profit
of investments accounted for using the equity method.
Impairment
Tolling concessions with a finite useful life are assessed for impairment whenever there are indications that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. Refer to note 3.2 for additional detail on the accounting policy for impairment of assets
and reversal of impairment.
Balance at the beginning of the year
Acquisition cost (a)
Amortisation of tolling concession
Impairment of tolling concession (b)
Foreign exchange movement
Balance at the end of the year
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
2,438,598
2,578,434
8,273
(66,439)
(143,896)
(172,197)
16,557
(69,273)
(99,401)
12,281
2,064,339
2,438,598
–
–
–
–
–
–
–
–
–
–
–
–
(a) In the current year, $5.6 million was recognised on DTR Connector project and $2.7 million was recognised on the West End Works (refer also to note 2.1 for the
construction revenue policy). In the prior year, a tolling concession of $16.6 million was recognised on the DTR Connector.
(b) An impairment charge of $143.9 million was taken on the Dulles Greenway concession. In the prior year an impairment charge of $165.4 million was recorded,
comprising $99.4 million tolling concession impairment expense and $66.0 million goodwill impairment expense (refer to note 4.2).
84 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS 4.2 Goodwill
Goodwill
Goodwill represents the excess of the consideration paid over the fair value of the identifiable net assets of the acquired entity
at the date of acquisition. Goodwill arising from business combinations is included on the face of the statement of financial
position. Goodwill arising from acquisitions of associates is included in the carrying amount of investments in associates.
Impairment
Goodwill is not subject to amortisation but is tested annually for impairment, or more frequently if events or changes in
circumstances indicate that the carrying amount may not be recoverable. The recoverable amount of a cash generating unit
(‘CGU’) is determined based on fair value less costs of disposal calculations which require the use of assumptions. The
calculations use detailed cash flow projections covering the remaining concession life of the CGU.
Refer to note 3.2 for additional detail on the accounting policy for impairment.
Balance at the beginning of the year
Impairment on Goodwill in Dulles Greenway (a)
Foreign exchange movement
Balance at the end of the year
ALX
ATLAX Group
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
14,054
–
37
14,091
79,390
(66,028)
692
14,054
–
–
–
–
–
–
–
–
(a) In the prior year a goodwill impairment charge of $66.0 million was recognised for the Dulles Greenway concession (refer to note 4.1).
Key assumptions used for fair value less costs of disposal calculations at 31 December 2020 – Dulles Greenway
Assumption
Approach used to determine values
Traffic volume
Based on historic trends and the Groups’ internal long-term traffic forecasting models.
Traffic forecasts for Dulles Greenway are based on assumptions of traffic growth broadly in line with
economic development, population growth and employment within its catchment area.
Traffic during 2020 was impacted by the COVID-19 pandemic. Forecasts assume that traffic largely, but
not fully, recovers during 2021, however, macroeconomic assumptions and inputs include the impact of
COVID-19, for example, employment is assumed to fall as a result of the impact of COVID-19 and not return
to pre-COVID forecast levels until 2025.
Assumptions around the impact of announced changes to the transport network in the catchment area
around the Greenway have also been made in forecasting traffic over the medium term, based on historical
impacts of similar changes.
Based on the Groups’ long-term internal forecasts and independent third-party projections, long term CPI
rates are forecast to grow by between 2.2% and 2.3%.
Based on current regulation and the Groups’ long-term internal forecasts.
Toll rates for Dulles Greenway will be determined by decisions of the State Corporations Commission (SCC).
A rate case was submitted to the SCC on 19 December 2019 for tolls over the period from 1 January 2021
to 31 December 2025 and a decision regarding the submission is expected early 2021.
The Groups’ long-term assumption forecasts toll rates to escalate in a range within the historical experience
from inception to 1 January 2020. However, historical results provide no guarantee as new legislation
or regulatory decisions could impact future outcomes.
Detailed cash flows were discounted using a discount rate of 9.25%. The discount rate is based on a
number of factors including, but not limited to, the business nature of operations, regulatory environment,
macroeconomic conditions, risk profile, observed market prices for similar transactions and reflects the
uncertainty around traffic forecasts in particular post the recent policy positions taken to manage the
COVID-19 pandemic.
Long term CPI
(% annual growth)
Average toll
(% annual growth)
Post-tax discount rate
ATLAS ARTERIA ANNUAL REPORT 2020 | 85
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS Impact of possible changes in key assumptions
The assets and liabilities associated with the cash generating unit (‘CGU’) were initially recognised in Atlas Arteria’s balance sheet
at their fair values on the dates on which Atlas Arteria achieved control of the CGU. Given the decline in traffic at Dulles Greenway
during this period, and uncertainty around how the U.S. economy will recover as a result of the COVID-19 pandemic, the Boards
of ATLIX and ATLAX determined it was necessary to further impair their respective investments in Dulles Greenway by a total
of $143.9 million (US$100.0 million) (refer to note 4.1).
An adverse change in any of the key assumptions could result in the recoverable amount of the CGU falling below its carrying amount.
The table below shows the impact of reasonably possible changes in key assumptions on the recoverable amount of CGU.
Sensitivities
Discount Rate +0.5%
Discount Rate -0.5%
Toll growth rates +0.1%
Tolls growth rates -0.1%
Traffic growth rate +0.1%
Traffic growth rate -0.1%
Valuation
Impact US$
million
(51.6)
57.8
19.4
(19.1)
18.2
(17.9)
There is a complex interplay between the key assumptions, however, which means that any change in one assumption could
impact the outcomes of another. Equally, as some assumptions change, there may be a compensating reduction in risk or
resolution of uncertainty, premiums for which are carried within the post tax discount rate.
The assumptions used in the fair value less costs of disposal calculation are measured at Level 3 in the fair value hierarchy
(refer to note 5.3 for additional detail on the fair value hierarchy).
86 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS 4.3 Other assets
Receivables
Receivables are initially recognised at fair value and subsequently measured at amortised cost because their cash flows
represent solely payments of principal and interest. Interest income from loans and receivables is recognised on an
accruals basis.
Receivables are generally received within 30 days of becoming due and receivable. A provision is raised for any doubtful debts
based on a review of all outstanding amounts at year end. Bad debts are written off in the year in which they are identified.
Impairment
Atlas Arteria and the ATLAX Group assess, on a forward-looking basis, the expected credit losses associated with their loan
assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant
increase in credit risk.
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. Atlas
Arteria and the ATLAX Group use judgement in making these assumptions and selecting the inputs to the impairment
calculation, based on the Groups’ past history, existing market conditions as well as forward looking estimates at the
end of each reporting period.
Current
Receivables from related parties
Less: Loss allowance
Prepayments
Tax receivable
Trade Receivables and other assets (a)
Total current other assets
Non-current
Other assets
Total non-current other assets
ALX
ATLAX Group
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
886
–
1,618
67
4,730
7,301
136
136
–
–
987
129
142,274
143,390
248
248
3,202
1,733
(18)
486
67
1,861
5,598
22
22
(8)
172
129
68
2,094
51
51
(a) In July 2019, MAF2 declared a distribution to be funded by the redemption of shares. The total distribution to be paid to Atlas Arteria amounted to € 157.3 million
($253.2 million), € 71.3 million ($114.8 million) of this distribution was paid in September 2019, with the remaining € 86.0 million ($138.4 million) of the distribution
paid in 2020.
The Groups’ maximum credit exposure for receivables is the carrying value. Discussion of the Groups’ policies concerning the
management of credit risk can be found in note 5.4. The fair value of receivables approximates their carrying values.
ATLAS ARTERIA ANNUAL REPORT 2020 | 87
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 4.4 Other liabilities
Payables and other liabilities
Liabilities are recognised when an obligation exists to make future payments as a result of a purchase of assets or services,
whether or not billed. Trade creditors are generally settled within 30 days.
Provisions
Provisions are recognised when the Groups have a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligations; and the amount can be reliably estimated.
Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability.
Employee benefits
Liabilities for salaries, including non-monetary benefits and leaves that are expected to be settled wholly within 12 months
after the end of the period in which the employees render the related service are recognised in respect of employees’ services
up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
Current
Manager and adviser fees payable
Provision for toll maintenance
Sundry creditors and accruals
Tax payables
Employee entitlements
Lease liability (a)
Total current other liabilities
Non-current
Provision for toll maintenance
Lease liability (a)
Total non-current other liabilities
ALX
ATLAX Group
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
–
3,476
9,774
172
1,623
1,255
5,285
2,543
12,358
2,478
2,214
1,049
16,300
25,927
18,950
19,921
38,871
14,752
19,598
34,350
–
–
4,020
–
1,287
187
5,494
–
1,600
1,600
90
–
1,480
–
1,631
176
3,377
–
1,756
1,756
(a) The corresponding right of use asset has been included in the property, plant and equipment balance.
88 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS 5 Capital and risk management
5.1 Debt at amortised cost
Financial liabilities
Financial liabilities are initially recorded at fair value plus directly attributable transaction costs and thereafter at amortised
cost using the effective interest method.
ALX
ATLAX Group
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
Current
Non-recourse TRIP II bonds and interest accrued thereon (a)
Non-recourse Warnow Tunnel borrowings and interest accrued thereon (b)
Total current debt at amortised cost
Non-current
48,426
4,786
53,212
41,301
3,880
45,181
Non-recourse TRIP II bonds and interest accrued thereon (a)
1,299,928
1,397,502
Non-recourse Warnow Tunnel borrowings and interest accrued thereon (b)
171,032
Borrowings from financial institutions (c)
Total non-current debt at amortised cost
172,932
558,894
–
1,470,960
2,129,328
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(a) Non-recourse TRIP II bonds
The Atlas Arteria consolidated financial statements incorporate bonds raised by TRIP II to finance the construction of infrastructure
assets. These bonds are non-recourse beyond the TRIP II assets and Atlas Arteria has no commitments to provide further debt
or equity funding to TRIP II in order to meet these liabilities.
All of these bonds are in the form of fixed interest rate senior bonds, with US$35.0 million (2019: US$35.0 million) of current
interest bonds and US$1,055.1 million (2019: US$1,018.4 million) of zero coupon bonds with maturities extending to 2056.
(b) Non-recourse Warnow Tunnel borrowings
The Atlas Arteria consolidated financial statements incorporate borrowings raised by Warnow Tunnel to finance the construction
of infrastructure assets. These borrowings are non-recourse beyond the Warnow Tunnel assets and Atlas Arteria has no
commitments to provide further debt or equity funding to Warnow Tunnel in order to meet these liabilities. The borrowings are
payable in three tranches with maturities extending to 2053.
(c) Borrowings from financial institutions
Borrowings from financial institutions at December 2019 of $558.9 million consisted of the principal $559.6 million (€ 350.0 million)
net of up front issue costs $0.8 million (€ 0.5 million). This debt facility was entered into on 31 May 2018 with a maturity date of
2024. The debt facility was repaid in full on 22 June 2020.
Unamortised issue costs of $0.8 million (€ 0.5 million) on the debt facility have been expensed to finance costs.
ATLAS ARTERIA ANNUAL REPORT 2020 | 89
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 5.2 Contributed equity
Ordinary shares
Contributed equity
On issue at the beginning of the year
Issue of short term incentive (‘STI’) securities
Issue of securities
Transaction costs associated with issue of securities
Capital return
On issue at the end of the year
Attributable to ATLIX
equity holders
Attributable to ATLAX
equity holders
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
3,747,750
3,275,591
3,747,750
3,275,591
202,075
202,075
187,571
187,571
3,275,591
1,995,994
187,571
197,311
861
791
481,036
1,304,255
(9,738)
(25,449)
–
–
24
13,964
516
–
3,747,750
3,275,591
202,075
27
45,745
(2,217)
(53,295)
187,571
During the year ended 31 December 2020, the Groups undertook a $420.0 million Placement and a $75.0 million SPP allocated to ATLIX
and ATLAX based on their proportional net asset value. The Placement resulted in the issuance of 67.7 million new ordinary stapled
securities. The new stapled securities were issued at a price of $6.20 per security and the Placement was fully subscribed. The SPP
resulted in the issuance of 12.1 million new ordinary stapled securities on 2 July 2020, issued at a price of $6.20 per security.
During the year ended 31 December 2019, the Groups undertook a $1,350.0 million equity raise, comprising a $451.9 million institutional
placement and a 4 for 21 accelerated pro-rata non-renounceable entitlement offer of $898.1 million. The equity raise resulted in the
issuance of 195.7 million new ordinary stapled securities. The new stapled securities were issued at a price of $6.90 per security and the
entitlement offer was fully subscribed.
On 15 April 2020, 155,024 stapled securities were issued to fulfil short term incentive (‘STI’) requirements. These were valued at $5.71 per
security, however they have been issued at zero cost and are subject to a holding lock until the vesting date.
On 16 August 2019, 107,575 stapled securities were issued to fulfil STI requirements. These were valued at $7.61 per security and have
now vested.
On issue at the beginning of the year
Issue of securities
Issue of STI securities
On issue at the end of the year
Attributable to ATLIX
equity holders
Attributable to ATLAX
equity holders
As at
31 Dec 2020
As at
31 Dec 2019
As at
31 Dec 2020
As at
31 Dec 2019
Number of
shares
’000
Number of
shares
’000
Number of
shares
’000
Number of
shares
’000
879,025
79,838
155
683,265
195,652
108
879,025
79,838
155
683,265
195,652
108
959,018
879,025
959,018
879,025
Ordinary shares in ATLIX and in ATLAX
Each fully paid stapled security confers the right to vote at meetings of securityholders, subject to any voting restrictions imposed
on a securityholder under the Corporations Act 2001 in Australia, Companies Act in Bermuda and the ASX Listing Rules. On a show
of hands, every securityholder present in person or by proxy has one vote.
On a poll, every securityholder who is present in person or by proxy has one vote for each fully paid share in respect of ATLIX and
one vote for each fully paid share in respect of ATLAX.
The Directors of ATLIX and ATLAX may declare distributions which are appropriate given the financial position of ATLIX and ATLAX.
If ATLIX and ATLAX are wound up, the liquidator may, with the sanction of an extraordinary resolution and any other requirement
of law, divide among the securityholders in specie or in kind the whole or any part of the assets of ATLIX and ATLAX.
90 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS 5.3 Reserves
Share-based payments
Share-based compensation benefits are provided to employees via the STI Plan, the employee equity (‘EE’) Plan and the long
term incentive plan (‘LTIP’). Securities (equal to 100% (2019: 50%) of the value awarded) are only issued under the STI Plan if
performance conditions are met. Securities issued under the STI Plan are time contingent and are issued in restricted
securities on terms determined by the Boards. The share based STI Plan is recognised as an employee expense with a
corresponding increase in equity. The total amount to be expensed is determined based on the probability of the vesting being
met. Securities issued under the EE Plan are subject to service conditions and are issued in non-restricted securities. The EE
Plan is recognised as an employee expense with a corresponding increase in equity. The total amount expensed is determined
based on the probability of the vesting being met. The fair value of performance rights granted under the LTIP is recognised as
an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined
by reference to the fair value of the performance rights granted including the market performance conditions and the number
of equity instruments expected to vest.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, Atlas Arteria and the ATLAX Group revise their estimates of the number of
performance rights that are expected to vest based on service conditions. It recognises the impact of the revision to original
estimates, if any, in profit or loss, with a corresponding adjustment to equity.
Hedging
The hedging reserve includes the cash flow hedge reserve (see note 5.4 for details). The cash flow hedge reserve is used to
recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges. Amounts
are subsequently transferred to the initial cost of the investment.
Balance of reserves
Foreign currency translation reserve
Hedging reserve
Other reserve
Balance at the end of the year
Movements of reserves
Foreign currency translation reserve
Balance at the beginning of the year
Adjustment to prior period
Net exchange differences on translation of foreign controlled entities
Transfer to accumulated losses (a)
Balance at the end of the year
Hedging reserve
Balance at the beginning of the year
Change in fair value of the cash flow hedges
Settlement of the cash flow hedge
Balance at the end of the year
Other reserve
Balance at the beginning of the year
Employee equity based awards (b)
Balance at the end of the year
Attributable to ATLIX
equity holders
Attributable to ATLAX
equity holders
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$'000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
(16,080)
–
2,473
(13,607)
178,231
(25,287)
1,339
154,283
21,760
(6,688)
–
74
–
46
21,834
(6,642)
Attributable to ATLIX
equity holders
Attributable to ATLAX
equity holders
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$'000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
178,231
190,155
(6,688)
(7,669)
–
(101,431)
(92,880)
(16,080)
(25,287)
24,716
571
–
1,339
1,134
2,473
(2,615)
(9,309)
–
178,231
–
(25,287)
–
(25,287)
–
1,339
1,339
–
(9,545)
37,993
21,760
–
–
–
–
46
28
74
–
981
–
(6,688)
–
–
–
–
141
(95)
46
(a) Foreign exchange translation gains in ATLIX Group of $92.9 million and foreign exchange translation losses in ATLAX Group of $38.0 million were transferred
to accumulated losses from foreign currency translation reserve following the disposal of foreign operations all prior to 2016.
(b) Expenses arising from share based benefits relating to STI’s and LTI’s attributable to ATLIX equity holders as at 31 December 2020: $1.1 million (31 December 2019:
$1.3 million). Expenses arising from share based benefits relating to STI’s and LTI’s attributable to ATLAX equity holders as at 31 December 2020: $0.03 million
(31 December 2019: $(0.1) million).
ATLAS ARTERIA ANNUAL REPORT 2020 | 91
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 5.4 Financial risk and capital management
5.4.1 Financial risk management
The Groups’ activities expose them to a variety of financial risks: market risk (including foreign exchange risk and fair value
interest rate risk), credit risk, liquidity risk and cash flow interest rate risk. The Groups’ overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on financial performance of
the Groups. The Groups use derivative financial instruments such as foreign exchange contracts to hedge certain risk exposures.
The Risk Management Policy and Framework is implemented by management under policies approved by the Boards.
Management identifies, quantifies and qualifies financial risks and provides written principles for overall risk management, as
well as written policies covering specific areas, such as mitigating foreign exchange, interest rate and credit risks, use of derivative
financial instruments and investing excess liquidity.
5.4.2 Derivatives
The Groups have the following derivative financial instruments in the balance sheet:
Current liabilities
Foreign currency forwards – cash flow hedge
Interest rate swaps
Non-current liabilities
Interest rate swaps
Total derivative financial instrument liabilities
ALX
ATLAX Group
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
–
2,515
12,332
14,847
30,581
3,187
12,803
46,571
–
–
–
–
–
–
–
–
Classification of derivatives
Derivatives are only used for economic hedging purposes and not as speculative investments. However, where derivatives do not
meet the hedge accounting criteria, they are accounted for at fair value through profit or loss. They are presented as current assets
or liabilities to the extent they are expected to be settled within 12 months after the end of the reporting period.
Further information about the derivatives used by the Groups is provided in note 5.4.3 below.
Fair value measurement
From time to time, the Groups enter into forward exchange contracts.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to
their fair value at each reporting date.
The accounting for subsequent changes in fair value depends on whether or not derivatives are designated as hedge accounting
relationships. If hedge accounting is not designated, any changes in their fair value are recognised immediately in the Consolidated
Statement of Comprehensive Income.
Hedging Reserves
The Groups’ hedging reserves disclosed in note 5.3 relate to the following hedging instruments:
Opening balance 1 January 2020
Less: Change in fair value of the hedging instrument recognised in other
comprehensive income for the year
Less: Reclassified to the cost of investment not included in OCI
Closing balance 31 December 2020
Cash flow hedge reserve
Forward
exchange
contracts
$’000
Total hedge
reserves
$’000
25,287
25,287
(24,716)
(24,716)
(571)
–
(571)
–
92 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS Amounts recognised in the profit or loss
The following amounts were recognised in profit or loss in relation to the hedge ineffectiveness of foreign exchange forward
contracts designated in a cash flow hedge relationship:
ALX
ATLAX Group
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
Hedge ineffectiveness of foreign currency forwards – amount
recognised in other (loss)/gain
420
(5,294)
–
–
Hedge effectiveness
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness
assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
For hedges of foreign currency purchases, the Groups enter into hedge relationships where the critical terms of the hedging
instrument match exactly with the terms of the hedged item. The Groups therefore perform a qualitative assessment of
effectiveness. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly
with the critical terms of the hedging instrument, the Groups use the hypothetical derivative method to assess effectiveness.
In hedges of foreign currency purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was
originally estimated, or if there are changes in the credit risk of ATLIX or the derivative counterparty.
Deal Contingent foreign exchange forward contract
ATLIX entered into a deal contingent foreign exchange forward contract on 20 November 2019 (‘FX Forward Contract’). This is a
cash flow hedge intended to mitigate foreign exchange risk associated with € 711.0 million payment on completion of the APRR
Transaction. As the cash flow on settlement of the FX Forward Contract matched the cash flow required by and was contingent
upon the settlement of the APRR Transaction, there is an economic relationship between the APRR Transaction and the cash
flow hedge.
Hedge ineffectiveness for the FX Forward Contract occurred due to the embedded premium for the contingent component
associated with settlement for the APRR Transaction. Settlement took place on 24 February 2020. Under the terms of the FX
Forward Contract, € 710.0 million was purchased at a EUR:AUD exchange rate of 1.6449 including the deal contingent charge
(of which $5.3 million was recognised in 2019). In 2020 due to the timing of the hedge settlement $0.4 million was recognised
as a reversal of surplus hedge ineffectiveness recognised in 2019.
ATLAS ARTERIA ANNUAL REPORT 2020 | 93
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 5.4.3 Market risk
Foreign exchange risk
Foreign exchange risk arises when recognised assets and liabilities and future commercial transactions are denominated in
a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.
The Groups operate internationally and are exposed to foreign exchange risk mainly arising from currency exposures to the Euro
(‘EUR’) and United States Dollar (‘USD’).
The Groups do not hedge the foreign exchange exposure on overseas investments.
Financial instruments are converted to Australian Dollars (‘AUD’) at the rate of exchange ruling at the financial reporting date.
Derivative instruments are valued with reference to forward exchange rates from the year end to settlement date, as provided
by independent financial institutions.
In assessing foreign exchange risk, management has assumed the following possible movements in the AUD:
− AUD/EUR exchange rate increased/decreased by 5 Euro cents (2019: 5 Euro cents)
− AUD/USD exchange rate increased/decreased by 7 US cents (2019: 7 US cents)
− AUD/GBP exchange rate increased/decreased by 6 UK pence (2019: 6 UK pence)
The tables below show the amounts for financial instruments that would be recognised in profit or loss or directly in equity
if the movements in foreign exchange rates as outlined above occurred. The Groups’ management have determined the above
movements in the AUD to be a reasonably possible shift following analysis of foreign exchange volatility for relevant currencies
over the last five years.
ALX
P&L
2020
$’000
Total financial assets (a)
(2,105)
Total financial
liabilities (b)
Total
ATLAX Group
Total financial assets (a)
Total financial
liabilities (b)
Total
290
(1,815)
P&L
2020
$’000
(470)
280
(190)
Appreciation in Australian Dollar
Depreciation in Australian Dollar
Foreign exchange risk
P&L
2019
$’000
(721)
21
(700)
Equity
2020
$’000
Equity
2019
$’000
–
–
–
–
–
–
P&L
2020
$’000
2,497
(345)
2,152
P&L
2019
$’000
858
(26)
832
Equity
2020
$’000
Equity
2019
$’000
–
–
–
–
–
–
Appreciation in Australian Dollar
Depreciation in Australian Dollar
Foreign exchange risk
P&L
2019
$’000
(3)
4
1
Equity
2020
$’000
Equity
2019
$’000
–
–
–
–
–
–
P&L
2020
$’000
560
(333)
227
P&L
2019
$’000
4
(5)
(1)
Equity
2020
$’000
Equity
2019
$’000
–
–
–
–
–
–
(a) Financial assets include cash, cash equivalents, restricted cash, receivables and derivative financial instruments.
(b) Financial liabilities include payables, debt at amortised cost and derivative financial instruments.
Interest rate risk
The Groups have no significant interest bearing assets and liabilities whose fair value is significantly impacted by changes
in market interest rates.
In assessing interest rate risk, management has assumed the following movements in the identified interest rates:
− Bank bill swap reference rate (AUD BBSW 90 days) increased/decreased by 69 bps (2019: 58 bps)
− Bank bill swap reference rate (EURIBOR 90 days) increased/decreased by 14 bps (2019: 10 bps)
− Bank bill swap reference rate (USD LIBOR 90 days) increased/decreased by 89 bps (2019: 56 bps)
− Bank bill swap reference rate (GBP LIBOR 90 days) increased/decreased by 37 bps (2019: 21 bps)
− Bank bill swap reference rate (EURIBOR 6 months) increased/decreased by 17 bps (2019: 11 bps)
− Bank bill swap reference rate (AUD BBSW 6 months) increased/decreased by 68 bps (2019: 57 bps)
94 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS The tables below show the amounts for financial instruments that would be recognised in profit or loss or directly in equity if the
above interest rate movements occurred. The Groups’ management have determined the above movements in interest rates to
be a reasonably possible shift following analysis of the interest spreads of comparable debt instruments over the past five years.
Interest rate risk
ALX
Increase in interest rates
Decrease in interest rates
P&L
2020
$’000
P&L
2019
$’000
Equity
2020
$’000
Equity
2019
$’000
P&L
2020
$’000
P&L
2019
$’000
Equity
2020
$’000
Equity
2019
$’000
Total financial assets
3,032
8,275
Total financial
liabilities
Total
(306)
2,726
(766)
7,509
–
–
–
–
–
–
(3,032)
(8,275)
306
(2,726)
766
(7,509)
–
–
–
–
–
–
Interest rate risk
Increase in interest rates
Decrease in interest rates
P&L
2020
$’000
328
–
328
P&L
2019
$’000
281
–
281
Equity
2020
$’000
Equity
2019
$’000
–
–
–
–
–
–
P&L
2020
$’000
(328)
–
(328)
P&L
2019
$’000
(281)
–
(281)
Equity
2020
$’000
Equity
2019
$’000
–
–
–
–
–
–
ATLAX Group
Total financial assets
Total financial
liabilities
Total
5.4.4 Credit risk
Potential areas of credit risk consist of deposits with banks and financial institutions as well as receivables from associates and
governments. The Groups limit their exposure in relation to cash balances by only dealing with well-established financial
institutions or high-quality credit standing. With the exception of the transactions between ATLIX and ATLAX, the Groups transact
with independently rated parties with appropriate minimum short-term credit ratings. The Boards set exposure limits to financial
institutions and these are monitored on an ongoing basis.
Sound credit risk management involves prudently managing the risk and reward relationship and controlling and minimising credit
risks across a variety of dimensions, such as quality, concentration, maturity and security.
The tables below show the balances within the Groups and the ATLAX Group that may be subject to credit risk.
2020
Cash and cash equivalents
Restricted cash
Receivables – current
Receivables – non-current
Tax receivables
Total
2019
Cash and cash equivalents
Restricted cash
Receivables – current
Tax receivables
Total
Financial
institutions
$’000
260,341
224,089
–
–
–
ALX
Corporates
and others
$’000
Total
$’000
Financial
institutions
$’000
ATLAX Group
Corporates
and others
$’000
–
–
5,616
–
67
260,341
224,089
5,616
–
67
52,130
–
–
–
–
–
–
5,063
–
67
Total
$’000
52,130
–
5,063
–
67
484,430
5,683
490,113
52,130
5,130
57,260
Financial
institutions
$’000
1,450,221
253,904
ALX
Corporates
and others
$’000
Total
$’000
Financial
institutions
$’000
ATLAX Group
Corporates
and others
$’000
–
–
1,450,221
48,612
253,904
142,274
129
–
–
–
–
–
142,274
129
1,704,125
142,403
1,846,528
48,612
–
–
1,801
129
1,930
Total
$’000
48,612
–
1,801
129
50,542
ATLAS ARTERIA ANNUAL REPORT 2020 | 95
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS Financial institutions
The credit risk to financial institutions relates to cash held by and term deposits due from Australian and OECD banks. In line with
the credit risk policies of the Groups these counterparties must meet a minimum Standard and Poor’s short-term credit rating
of A-1 unless an exception is approved by the Boards.
Corporates and others
The Groups’ credit risk relates primarily to receivables from related parties and governments. These counterparties have a range
of credit ratings.
5.4.5 Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount
of committed credit facilities and the ability to close out market positions. The Groups have a liquidity management policy which
manages liquidity risk by monitoring the stability of funding, surplus cash or highly liquid cash assets, anticipated cash in and
outflows and exposure to connected parties.
The tables below show the forecast contractual undiscounted future cash outflows of the liabilities at balance date for the Groups.
Financial Liabilities
2020
Debt at amortised cost (a)
Payables
Derivatives
Total
2019
Debt at amortised cost (a)
Payables
Derivatives
Total
Financial Liabilities
2020
Payables
Total
2019
Payables
Total
ALX
1-2 years
$’000
2-3 years
$’000
3-5 years
$’000
Greater
than
5 years
$’000
Total
$’000
100,127
102,232
213,369
1,304,455
1,773,395
3,146
2,056
3,299
1,850
6,512
5,942
25,026
2,484
54,284
14,847
Less than
1 year
$’000
53,212
16,301
2,515
72,028
105,329
107,381
225,823
1,331,965
1,842,526
45,181
25,927
3,187
74,295
56,641
115,739
215,763
1,732,560
2,165,884
2,752
2,748
3,798
2,530
5,172
4,297
22,628
3,228
60,277
15,990
62,141
122,067
225,232
1,758,416
2,242,151
ATLAX Group
1-2 years
$’000
2-3 years
$’000
3-5 years
$’000
194
194
155
155
201
201
166
166
427
427
365
365
Less than
1 year
$’000
5,494
5,494
3,377
3,377
Greater
than
5 years
$’000
778
778
1,070
1,070
Total
$’000
7,094
7,094
5,133
5,133
(a) Includes consolidated debt held by TRIP II and Warnow Tunnel that is non-recourse to the Groups.
96 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS 5.4.6 Fair value measurement of financial instruments
The fair value measurements of financial assets and liabilities are assessed in accordance with the following hierarchy.
(i) Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities.
(ii) Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices); and
(iii) Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable valuation input).
The Groups have derivative financial instruments that are measured at fair value on a recurring basis. These instruments are
entered to minimize potential variations in cash flows resulting from fluctuations in interest rates and foreign currency and their
impact on its variable-rate debt and cash payments and receipts. The Groups do not enter into derivative instruments for any
purpose other than economic interest rate and foreign currency hedging. That is, the Groups do not speculate using derivative
instruments. They are presented as current assets or liabilities to the extent they are expected to be settled within 12 months after
the end of the reporting period. These instruments are measured at Level 2 hierarchy and are revalued using externally provided
dealer quotes.
The Groups’ policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting
period. There were no transfers in the current year.
The Groups do not measure any financial assets or financial liabilities at fair value on a non-recurring basis.
Fair values of other financial instruments (unrecognised)
The Groups also have a number of financial instruments which are not measured at fair value in the balance sheet. With the
exception to those listed below, the fair values are not materially different to their carrying amounts as: the interest receivable/
payable is either close to current market rates; the instruments are short-term in nature, or the instruments have recently been
brought onto the balance sheet and therefore the carrying amount approximated the fair value. The fair value of these financial
instruments is determined using discounted cash flow analysis. The fair value of all financial assets (excluding Investments
accounted for using the equity method) and financial liabilities approximated their carrying amounts at 31 December 2020.
There is no debt at amortised cost in the ATLAX Group.
Debt at amortised cost
Non-recourse TRIP II bonds and accrued interest thereon
Non-recourse Warnow borrowings and accrued interest thereon
5.4.7 Capital management
The Groups capital management objectives are to:
Carrying amount
$’000
Fair value
$’000
1,348,354
1,596,734
175,818
176,611
− Ensure sufficient capital resources to support the Groups’ business, operational and growth requirements
− Safeguard the Groups’ ability to continue as a going concern
− Balance distribution growth with long term sustainability
Annual reviews of the Groups’ capital requirements are performed to ensure the Groups are meeting their objectives.
Capital is defined as contributed equity plus reserves. The Groups do not have any externally imposed capital requirements
at 31 December 2020 or 31 December 2019.
ATLAS ARTERIA ANNUAL REPORT 2020 | 97
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 6 Group disclosures
6.1 Parent entity financial information
Parent entity financial information
The financial information for ATLIX and ATLAX for this disclosure has been prepared on the same basis as the Financial
Reports, except as set out below:
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the separate financial
information of ATLIX and ATLAX.
Tax consolidation legislation
ATLAX and its wholly owned Australian controlled entities have implemented the tax consolidation legislation as of 2 February 2010.
The head entity, ATLAX and the controlled entities in the tax consolidated group account for their own current and deferred
tax amounts.
These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone taxpayer in its
own right. In addition to its own current and deferred tax amounts, ATLAX also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax
consolidated group.
The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate ATLAX
for any current tax payable assumed and are compensated by ATLAX for any current tax receivable and deferred tax assets
relating to unused tax losses or unused tax credits that are transferred to ATLAX under the tax consolidation legislation.
The funding amounts are determined by reference to the amounts recognised in the wholly owned entities’ Financial Reports.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head
entity, which is issued as soon as practicable after the end of each financial year.
The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current
amounts receivable from or payable to other entities in the ATLAX Group. Any difference between the amounts assumed
and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from)
wholly owned tax consolidated entities.
Financial guarantees
Where the parent entities have provided financial guarantees in relation to loans and payables of subsidiaries for no consideration,
the fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment.
6.1.1 Summary financial information
In accordance with the Corporations Act 2001, the individual Financial Reports for ATLIX and ATLAX are shown in aggregate
amounts below:
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholder’s equity
Issued capital
Reserves
Retained earnings
Total equity
Profit/(loss) for the year
Total comprehensive income/(loss)
98 | ATLAS ARTERIA ANNUAL REPORT 2020
ATLIX
ATLAX
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
As at
31 Dec 2020
$’000
As at
31 Dec 2019
$’000
48,724
1,330,333
2,420,588
1,008,793
52,415
75,167
2,469,312
2,339,126
127,582
(4,174)
–
(16,904)
(95,921)
(4,174)
(112,825)
(688)
–
(688)
52,731
75,095
127,826
(5,480)
–
(5,480)
3,747,839
3,275,591
202,075
187,571
2,472
(23,948)
(1,285,173)
(1,025,342)
2,465,138
2,226,301
74
(75,255)
126,894
46
(65,271)
122,346
(154,339)
(154,339)
(221,674)
(221,674)
(9,984)
(9,984)
(7,137)
(7,137)
NOTES TO THE FINANCIAL REPORTS 6.1.2 Guarantees entered into by the parent entities
ATLIX and ATLAX have not directly provided any financial guarantees in respect to bank overdrafts and loans of subsidiaries
as at 31 December 2020 and 31 December 2019. ATLIX and ATLAX have not given any unsecured guarantees at 31 December 2020
or 31 December 2019.
Financial guarantees are held by European Transport Investments (UK) Limited (‘ETI UK’), a subsidiary of ATLIX, in respect of
external borrowings held by Warnow Tunnel and other guarantees have been made by other subsidiaries of ATLIX and ATLAX
over office leases.
6.1.3 Contingent liabilities of the parent entities
Refer to note 7.2 for ATLIX and ATLAX’s contingent liabilities as at 31 December 2020 and 31 December 2019.
6.2 Acquisition of subsidiaries
Business combinations
The acquisition method of accounting is used to account for all business combinations other than those under common
control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the
acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests
issued by the Groups. The consideration transferred also includes the fair value of any contingent consideration arrangement
and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs for consolidated entities are
expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are, with limited exceptions, measured initially at their fair values at the acquisition date. Contingent consideration is
subsequently remeasured to its fair value with changes recognised in the profit or loss.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-
date fair value of any previous equity interest in the acquiree over the fair value of the Groups share of the net identifiable
assets acquired is recorded as goodwill.
6.3 Subsidiaries
Subsidiaries
Subsidiaries, other than those that ATLIX has been deemed to have directly acquired through stapling arrangements, are
those entities over which the Groups are exposed to, or have the right to, variable returns from their involvement with the
entity and have the ability to affect those returns through their power over the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Group. The acquisition method of accounting is used to account for the
acquisition of subsidiaries by the Group. Where control of an entity is obtained during a financial year, its results are included
in the Statement of Comprehensive Income from the date on which control commences. Where control of an entity ceases
during a financial year, its results are included for that part of the year during which control existed and the subsidiary is
deconsolidated from the date that control ceases.
ATLAS ARTERIA ANNUAL REPORT 2020 | 99
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 6.3.1 ALX
Name of controlled entity
Atlas Arteria Limited
ALX Infrastructure US Pty Limited (a)
ALX Infrastructure Australia Pty Limited
ALX Investments (Australia) Pty Limited
Atlas Arteria Service Co Pty Limited (b)
Green Bermudian Holdings Limited
ALX Investments Limited
MIBL Finance (Luxembourg) Sarl
Atlas Arteria Luxembourg 1 Sarl (c)
Tollway Holdings Limited (d)
European Transport Investments (UK) Limited
Tipperhurst Limited (e)
Greenfinch Motorways Limited (f)
ALX Indiana Holdings LLC
ALX Holdings (US) LLC
Dulles Greenway Partnership
Dulles Greenway Investments 3 (US) LLC
Shenandoah Greenway Corporation
Toll Road Investors Partnership II, L.P. (g)
Warnowquerung GmbH & Co. KG
Warnowquerung Verwaltungsgesellschaft mbH
Country of establishment
2020 voting
%
2019 voting
%
Australia
Australia
Australia
Australia
Australia
Bermuda
Bermuda
Luxembourg
Luxembourg
UK
UK
UK
UK
USA
USA
USA
USA
USA
USA
Germany
Germany
100.0
–
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
(a) Deregistered on 2 June 2019
(b) Incorporated on 7 January 2019
(c) Incorporated on 12 November 2019
(d) In liquidation
(e) In liquidation
(f) In liquidation
(g) Atlas Arteria owns 100% of the general partner of Toll Road Investors Partnership II, L.P. (Trip II) giving Atlas Arteria control over the operations and management of
Trip II, the entity that manages the Dulles Greenway concession. In 2005 the Dulles Greenway Partnership L.P. entered call options with the other (non Atlas Arteria)
limited partners of Trip II, under which these limited partners agreed to vote their interests for certain Major Decisions in line with those recommended by the
general partner, and Atlas Arteria could purchase outstanding interests in Trip II to 2056. These call options lapsed on 30 December 2020. An assessment of control
has been reconsidered given the new arrangements and it has been concluded that control remains and these events do not impact the accounting for Trip II.
6.3.2 ATLAX Group
Name of controlled entity
Country of establishment
2020 voting
%
2019 voting
%
ALX Infrastructure Australia Pty Limited
ALX Investments Australia Pty Limited
Atlas Arteria Service Co Pty Limited (a)
ALX Indiana Holdings LLC
ALX Holdings (US) LLC
Dulles Greenway Partnership
Dulles Greenway Investments 3 (US) LLC
Shenandoah Greenway Corporation
(a) Incorporated on 7 January 2019
Australia
Australia
Australia
USA
USA
USA
USA
USA
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS 6.4 Related party disclosures
6.4.1 Adviser and Manager
Until management internalisation on 1 April 2019, the Adviser of ATLIX and the Manager of ATLAX was Macquarie Fund Advisers
Pty Ltd (‘Macquarie Advisers’), a wholly owned subsidiary of Macquarie Group Limited (‘Macquarie Group’).
6.4.2 Directors
The following persons were Directors of ATLIX during the whole of the year and up to the date of this report
(unless otherwise stated):
Jeffrey Conyers
Fiona Beck
Andrew Cook
Caroline Foulger
Debra Goodin
James Keyes
Nora Scheinkestel
Derek Stapley
(Chairman)
(Appointed on 25 November 2020)
(Appointed on 19 May 2020)
(Appointed on 1 November 2020)
(Retired on 19 May 2020)
(Retired on 1 November 2020)
(Retired on 25 November 2020)
The following persons were Directors of ATLAX during the whole of the year and up to the date of this report
(unless otherwise stated):
(Chairman)
(Retired on 1 November 2020)
Debra Goodin
Nora Scheinkestel
David Bartholomew
Graeme Bevans
Jean-Georges Malcor
6.4.3 Key Management Personnel
Key Management Personnel (‘KMP’) are defined in AASB 124 Related Party Disclosures as those having authority and responsibility for
planning, directing and controlling the activities of the entity. Across the Groups, the Directors of ATLIX and ATLAX, the Managing
Director and Chief Executive Officer (‘MD & CEO’), Chief Financial Officer (‘CFO’) and Chief Operating Officer (‘COO’) meet the
definition of KMP.
The compensation paid to non-executive Directors of ATLIX and ATLAX, is determined by reference to remuneration of similar roles
at similar entities. The level of compensation is not related to the performance of the Groups. The remuneration of the MD & CEO,
CFO and COO include STI and LTI components which include targets related to the performance of the group.
The total remuneration for the MD & CEO, CFO and COO is shown in the table below.
Short term employee
benefits
Share based payments
Long term benefits
Financial
year
Cash salary
$
Cash STI
$
Value of LTI
$
Value of STI
$
Superannuation
$
Long service
leave accrual
movement
$
Termination
benefit
Total
remuneration
Total
2020
2019
2,428,462
–
897,535
1,053,729
2,217,060
1,285,063
611,268
825,976
59,676
57,549
–
–
–
–
4,439,402
4,996,917
Compensation in the form of directors’ fees that were paid to the ATLIX and ATLAX Directors is as follows:
Year ended 31 Dec 2020
Year ended 31 Dec 2019
Short term
benefit
Cash salary
and fees
$
744,259
726,953
Long term
benefit
Superannuation
$
Total
directors’ fees
$
8,535
51,508
752,794
778,461
Short term
benefit
Cash salary
and fees
$
764,749
816,038
Long term
benefit
Superannuation
$
Total
directors’ fees
$
7,264
53,962
772,013
870,000
ATLIX
ATLAX
ATLAS ARTERIA ANNUAL REPORT 2020 | 101
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS
The number of ALX stapled securities held directly, indirectly or beneficially by the KMP across the Groups at 31 December
is set out below:
KMP interests
in ALX
stapled
securities
At 31 Dec 2020
KMP interests
in ALX
stapled
securities
At 31 Dec 2019
59,838
25,214
18,853
153,730
–
8,500
32,904
–
36,592
30,076
39,324
–
–
405,031
42,381
20,506
8,333
90,731
–
–
26,579
5,952
20,758
20,238
5,636
103,824
26,666
371,604
Jeffrey Conyers
David Bartholomew
Fiona Beck
Graeme Bevans
Andrew Cook (a)
Caroline Foulger (b)
Debra Goodin
James Keyes (c)
Nadine Lennie
Jean-Georges Malcor
Vincent Portal
Nora Scheinkestel (d)
Derek Stapley (e)
Total
(a) Appointed on 25 November 2020
(b) Appointed on 19 May 2020
(c) Retired on 19 May 2020
(d) Retired on 1 November 2020
(e) Retired on 25 November 2020
102 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS 6.4.4 Adviser and Manager fees
Under the terms of the governing documents of the individual entities within the Groups, fees incurred to the Adviser/Manager
of the Groups and the ATLAX Group were:
Base fee
Transition fee
MAF Advisory fee
Total
ALX
ATLAX Group
As at
31 Dec 2020
$
As at
31 Dec 2019
$
As at
31 Dec 2020
$
As at
31 Dec 2019
$
–
–
15,110,431
5,637,097
2,063,627
7,488,747
2,063,627
28,236,275
–
–
–
–
573,520
218,467
–
791,987
Base fee
Macquarie Advisers received the base management fees under their Atlas Arteria Management and Advisory Agreements until
15 May 2019. This equated to $15.1 million from 1 January to 15 May 2019. Atlas Arteria did not pay any further base or performance
management fees to Macquarie Advisers for the general management of Atlas Arteria after 15 May. Macquarie Advisers provided
specific services under the Transition Services Agreement for a fee of $750,000 per month from 15 May until 31 December 2019.
Total fees under this agreement were $5.6 million for the year ended 31 December 2019.
Fees were paid to Macquarie Infrastructure and Real Assets (Europe) Limited to act as manager of ATLIX’s indirect interest in
APRR until the completion of the APRR Transaction in March 2020. The final management fees paid to the Macquarie Group were
$2.1 million (€ 1.2 million) (2019: $28.2 million included the fees paid prior to the termination of the Atlas Arteria Management
and Advisory Agreements on 15 May 2019).
Other balances and transactions
At 31 December 2020, entities within the Groups had the following balances with related parties:
Other intercompany receivables from/(payables) to related parties
885,769
–
3,202,436
1,733,450
During the year, entities within the Groups had the following transactions with related parties:
ALX
ATLAX Group
As at
31 Dec 2020
$
As at
31 Dec 2019
$
As at
31 Dec 2020
$
As at
31 Dec 2019
$
ALX
ATLAX Group
As at
31 Dec 2020
$
As at
31 Dec 2019
$
As at
31 Dec 2020
$
As at
31 Dec 2019
$
Interest earned on deposits with Macquarie Bank
Interest between ATLAX and ATLIX on loan amount
Reimbursement of expenses paid by companies within the Macquarie
Group on behalf of Atlas Arteria
Reimbursement of ATLIX’s portion of expenses paid by ATLAX Group
Management Services
–
–
–
–
–
373,326
–
274,952
–
–
–
55,876
353,980
188,654
–
–
73,500
1,609,932
12,997,299
6,256,288
During the year, entities within the Groups received the following from associates:
ALX
ATLAX Group
As at
31 Dec 2020
$
As at
31 Dec 2019
$
As at
31 Dec 2020
$
As at
31 Dec 2019
$
Principal and interest received from preferred equity certificates and
shares issued by MAF2
MAF2 Fees
310,866,064
238,246,730
–
588,252
–
253,984
–
–
All of the amounts represent payments on normal commercial terms made in relation to the provision of goods and services.
ATLAS ARTERIA ANNUAL REPORT 2020 | 103
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 7 Other disclosures
7.1 Cash flow information
Reconciliation of profit after income tax to the net cash
flows from operating activities
Profit/(loss) from activities after income tax
(55,805)
(9,821)
(39,691)
(26,902)
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
(Gain)/loss on equity accounted investments
(196,086)
(254,874)
Net foreign exchange differences
Finance costs
Depreciation and amortisation
Amortisation of tolling concession
Amortisation of deferred tax liabilities
Impairment impact on deferred tax liabilities
Impairment of investment
Bad debt written off
Current tax (benefit)/expense
Issue of securities to employees
–
87,085
1,000
66,439
(1,168)
(6,343)
994
112,311
1,010
69,273
(1,558)
(5,675)
143,896
165,429
–
14
2,150
16
(1,972)
2,062
Non operating receivable/(received) (distribution from MAF2)
(136,820)
137,475
30,338
–
1,811
319
–
–
–
–
–
–
57
–
Changes in operating assets and liabilities
(Increase)/decrease in receivables
(Decrease)/increase in payables
Net cash inflow from operating activities
136,986
(138,103)
(2,019)
39,329
(186)
76,381
(1,930)
2,431
(6,665)
7.1.1 Net (debt)/cash reconciliation
This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.
20,907
30
37
311
–
–
–
–
–
–
(68)
–
466
(2,552)
(7,771)
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
260,341
1,450,221
(1,255)
(19,921)
(53,212)
(1,049)
(19,598)
(45,181)
(1,470,960)
(2,129,328)
52,130
(187)
(1,600)
–
–
48,612
(176)
(1,756)
–
–
(1,285,007)
(744,935)
50,343
46,680
260,341
1,450,221
(1,369,530)
(1,460,137)
(175,818)
(1,285,007)
(735,019)
(744,935)
52,130
(1,787)
–
48,612
(1,932)
–
50,343
46,680
Net (debt)/cash
Cash and cash equivalents
Lease liabilities – current
Lease liabilities – non-current
Borrowings – current
Borrowings – non-current
Net (debt)/cash
Cash
Gross debt – fixed interest rates
Gross debt – variable interest rates
Net (debt)/cash
104 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS ALX
Net debt at 1 January 2019
Cash flows
Loan facilities
Other non-cash adjustments (a)
Foreign exchange adjustments
Net debt at 31 December 2019
Cash flows
Loan facilities
Lease principal payments
Other non-cash adjustments (a)
Foreign exchange adjustments
Net debt at 31 December 2020
(a) Relates to unpaid interest that has accrued during the period
ATLAX Group
Net cash at 1 January 2019
Cash flows
Foreign exchange adjustments
Net cash at 31 December 2019
Cash flows
Foreign exchange adjustments
Net cash at 31 December 2020
Assets
Liabilities from financing activities
Cash and cash
equivalents
$’000
Borrowings –
current
$’000
Borrowings –
non-current
$’000
Total
$’000
186,468
1,262,673
–
–
(77,322)
(2,101,962)
(1,992,816)
105,291
–
–
–
1,367,964
–
(73,353)
(29,866)
(103,219)
1,080
203
2,500
3,783
1,450,221
(45,181)
(2,129,328)
(724,288)
(1,183,965)
–
–
–
(5,915)
260,341
–
56,605
(1,061)
(76,327)
11,497
–
(1,183,965)
576,143
632,748
–
(40,635)
102,939
(1,061)
(116,962)
108,521
(54,467)
(1,490,881)
(1,285,007)
Cash and cash
equivalents
$’000
12,461
35,928
223
48,612
4,717
(1,199)
52,130
Total
$’000
12,461
35,928
223
48,612
4,717
(1,199)
52,130
7.2 Contingent liabilities and capital commitments
European Transport Investments (UK) Limited (ETI UK), a subsidiary of ATLIX, has made guarantees, totalling € 2 million
($3.2 million) (31 December 2019: € 2 million ($3.2 million)), in the event of a senior debt payment event of default
by Warnowquerung GmbH & Co KG.
This contingent commitment is backed by an on-demand guarantee, provided through a pledged cash account into which
€ 2 million ($3.2 million) (31 December 2019: € 2 million ($3.2 million)) has been deposited. These funds are restricted and are
classified as restricted cash on the Consolidated Statements of Financial Position. No provision has been raised against this item.
Trip II has entered into an agreement to complete operational and safety improvements to Virginia Route 7/U.S Route 15 Bypass at
the Dulles Greenway terminus in the Town of Leesburg. The commitment is for $2.8 million (US$2.1 million) at 31 December 2020.
No provision has been raised against this item.
ATLAS ARTERIA ANNUAL REPORT 2020 | 105
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 7.3 Remuneration of auditors
Amounts paid or payable to PricewaterhouseCoopers Australia for:
Audit services
Other assurance services (a)
Other services (b)
Amounts paid or payable to Network firms of
PricewaterhouseCoopers for:
Audit services
Taxation services (c)
Amounts paid or payable to PricewaterhouseCoopers for:
Audit and other assurance services
Other services
Amounts paid or payable to non PricewaterhouseCoopers
audit firms for:
Audit services provided by CERTIS GmbH
Wirtschaftsprüfungsgesellschaft (‘CERTIS’)
Non-audit services
ALX
ATLAX Group
Year ended
31 Dec 2020
$
Year ended
31 Dec 2019
$
Year ended
31 Dec 2020
$
Year ended
31 Dec 2019
$
755,094
134,000
49,500
938,594
503,200
213,771
–
377,547
13,215
49,500
251,600
10,043
–
716,971
440,262
261,643
506,761
120,642
627,403
357,779
219,785
577,564
46,233
38,101
–
–
46,233
38,101
1,395,855
1,074,750
170,142
219,785
1,565,997
1,294,535
436,995
49,500
486,495
299,744
–
299,744
111,132
16,031
127,163
100,256
–
100,256
–
–
–
–
–
–
(a) Other assurance services in 2020 relates to Equity Raise due diligence and TRIP II accounting considerations (2019: Other assurance services relate to the Equity
Raise due diligence and a one off review of performance rights allocation).
(b) Other services include foreign exchange workshop and training sessions.
(c) Taxation services provided by network firms of the auditor relates to the filing of corporate income tax returns for the Groups’ entities domiciled outside of Australia.
7.4 Share based payments
STI Plan
The STI Plan applies to all Atlas Arteria staff based on a balance of financial and non-financial performance measures aligned with
Atlas Arteria’s short term goals. For the senior executives, following determination of the STI amount, 0% (2019: 50%) is paid in
cash and 100% (2019: 50%) is deferred for one year and vests in unrestricted securities on terms determined by Atlas Arteria.
LTIP
The LTIP is designed to provide long-term incentives to key employees to deliver long-term securityholder returns.
Under the plan, participants are granted performance rights which only vest if certain performance standards are met.
The amount of performance rights that will vest depends on ALX’s relative Total Securityholder Return (TSR) against the TSR
performance of a peer group of companies approved by the Board. Performance rights are granted under the plan for no
consideration. These performance rights are exercisable at no consideration upon satisfaction of performance hurdles.
106 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS EE Plan
The EE Plan was established in 2020 and provides all employees (excluding the executive team) with an allocation of performance
rights granted for no consideration. These performance rights are exercisable at no consideration upon satisfaction of the 3 year
service condition.
Set out below are summaries of performance rights granted under the plans:
As at 1 January
Rights granted during the year under the LTIP
Securities granted during the year under the STI Plan
Rights granted during the year under the EE plan
Rights exercised during the year under the LTIP
Securities exercised during the year under the STI Plan
Rights exercised during the year under the EE plan
Rights forfeited during the year under the LTIP
Securities forfeited during the year under the STI Plan
Rights forfeited during the year under the EE plan
ALX
ATLAX Group
Year ended
31 Dec 2020
Number
of equity
instruments
Year ended
31 Dec 2019
Number
of equity
instruments
Year ended
31 Dec 2020
Number
of equity
instruments
Year ended
31 Dec 2019
Number
of equity
instruments
717,632
378,688
–
11,988
–
(107,575)
–
–
–
–
237,765
372,292
107,575
–
–
–
–
–
–
–
717,632
378,688
–
11,988
–
(107,575)
–
–
–
–
237,765
372,292
107,575
–
–
–
–
–
–
–
As at 31 December
1,000,733
717,632
1,000,733
717,632
The performance conditions of the 2018 LTI performance rights were tested in February 2021. The performance conditions were
not satisfied at which time the rights were forfeited. LTI performance rights issued in 2019 that are outstanding at the end of the
year will vest after the end of the performance period which ends on 31 December 2021 only if performance conditions are met.
LTI performance rights issued in 2020 that are outstanding at the end of the year will vest after the end of the performance period
which ends on 31 December 2022 only if performance conditions are met. STI restricted securities issued in 2019 vested on
1 April 2020. STI restricted securities issued in 2020 vested in December 2020 as the service conditions were met, however remain
in a holding lock until the next trading window in 2021.
ATLAS ARTERIA ANNUAL REPORT 2020 | 107
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS 7.4.1 Fair value of performance rights granted
The assessed fair value at grant date of performance rights granted during the year ended 31 December 2020 ranged from
$1.85 to $5.02 per performance right (2019: $3.63 to $4.81). The fair value at grant date is independently determined using an
adjusted form of the Black Scholes Model which includes a Monte Carlo simulation model that takes into account the exercise
price, the term of the performance right, the impact of dilution (where material), the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield, the risk free interest rate for the term of the performance right and
the correlations and volatilities of the peer group companies.
The model inputs for performance rights granted during the year ended 31 December 2020 included:
(i)
Performance rights are granted for no consideration and vest based on Atlas Arteria’s TSR ranking within a peer group
of selected companies over vesting period. Vested performance rights are exercisable immediately after vesting
(ii) Grant date: 3 March 2020, 6 April 2020 and 19 May 2020
(iii) Expiry date: 28 February 2023
(iv) Expected price volatility of the Atlas Arteria’s stapled securities:
Performance rights with a grant date of 3 March 2020: 21.94%
Performance rights with a grant date of 6 April 2020: 32.23%
Performance rights with a grant date of 19 May 2020: 33.61%
(v) Expected dividend yield: 0%
(vi) Risk-free interest rate:
Performance rights with a grant date of 3 March 2020: Between -0.91% and 1.27%
Performance rights with a grant date of 6 April 2020: Between -0.65% and 0.64%
Performance rights with a grant date of 19 May 2020: Between -0.71% and 0.30%
The expected price volatility is based on the historic volatility (based on the remaining life of the performance rights), adjusted
for any expected changes to future volatility due to publicly available information.
7.4.2 Expenses arising from share-based payment transactions
Employee performance rights – LTI
Employee securities – STI
ALX
ATLAX Group
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
Year ended
31 Dec 2020
$’000
Year ended
31 Dec 2019
$’000
1,199
951
2,150
751
1,141
1,892
32
25
57
25
38
63
108 | ATLAS ARTERIA ANNUAL REPORT 2020
NOTES TO THE FINANCIAL REPORTS
7.5 Other accounting policies
This note provides a list of the significant accounting policies adopted in preparation of these Financial Reports to the extent they
have not already been disclosed in the other notes above.
7.5.1 Transaction costs
Transaction costs related to an investment in an associate are capitalised into the investment cost. Transaction costs arising
on the issue of equity instruments are recognised directly in equity and those arising on borrowings are netted with the liability
and included in interest expense using the effective interest method.
7.5.2 GST
The amount of GST incurred by the Groups that is not recoverable from the Australian Taxation Office (‘ATO’) is recognised as an
expense or as part of the cost of acquisition of an asset or adjusted from the proceeds of securities issued. These expenses have
been recognised in profit or loss net of the amount of GST recoverable from the ATO. Receivables and payables are stated at
amounts exclusive of GST. The net amount of GST recoverable from the ATO is included in receivables in the Consolidated Statement
of Financial Position. Cash flows relating to GST are included in the Consolidated Statements of Cash Flows on a net basis.
7.5.3 Foreign currency translation
Functional and presentation currency
Items included in the Financial Reports of each of the Groups’ entities are measured using the currency of the primary economic
environment in which the entity operates (the functional currency). The Financial Reports are presented in Australian Dollars,
which is the functional and presentation currency of ATLIX and ATLAX.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Group companies
The results and financial position of the Groups’ entities that have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
− Assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that
Statement of Financial Position
− Income and expenses for each Statement of Comprehensive Income are translated at exchange rates at the dates of transactions
or at an average rate as appropriate
− All resulting exchange differences are recognised as a separate component of equity
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are taken to
securityholders’ equity. When a foreign operation is disposed of or borrowings that form part of the net investment are repaid, a
proportionate share of such exchange differences are recognised in profit or loss as part of the gain or loss on disposal. Goodwill
and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
7.5.4 Offsetting financial instruments
Financial assets and financial liabilities may be offset and the net amount reported on the Statement of Financial Position when
there is a legally enforceable right to offset the amounts and either there is an intention to settle on a net basis, or realise the
financial asset and settle the financial liability simultaneously.
7.6 Events occurring after balance sheet date
Capital restructure at Warnow Tunnel
On 24 February 2021 Atlas Arteria executed agreements to restructure the capital arrangements at Warnow Tunnel. A new
€ 115.0 million facility (which includes fixed and variable tranches), together with a cash injection of around € 42.0 million from
Atlas Arteria will be used to repay the existing debt, current hedging arrangements, transaction costs and reserve funding
requirements. The cash injection will be funded from cash on the Atlas Arteria balance sheet.
Management is not aware of any other matter or circumstance not otherwise dealt with in the Financial Reports that has
significantly affected or may significantly affect the operations of the Groups or the results of those operations or the state
of affairs of the Groups in years subsequent to the year ended 31 December 2020.
ATLAS ARTERIA ANNUAL REPORT 2020 | 109
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS DIRECTORS’ DECLARATION – ATLAS ARTERIA
INTERNATIONAL LIMITED
The Directors of Atlas Arteria International Limited (‘ATLIX’) declare that:
a) the Financial Report of Atlas Arteria and notes set out on pages 67 to 109:
i) comply with Australian Accounting Standards and other mandatory professional reporting requirements; and
ii)
give a true and fair view of the financial position of Atlas Arteria as at 31 December 2020 and of its performance for the year
ended on that date; and
b) there are reasonable grounds to believe that ATLIX will be able to pay its debts as and when they become due and payable.
The Directors confirm that the Financial Report also complies with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
This declaration is made in accordance with a resolution of the Directors.
Jeffrey Conyers
Chairman
Atlas Arteria International Limited
Hamilton, Bermuda
24 February 2021
Caroline Foulger
Director
Atlas Arteria International Limited
Hamilton, Bermuda
24 February 2021
110 | ATLAS ARTERIA ANNUAL REPORT 2020
DIRECTORS’ DECLARATION – ATLAS ARTERIA LIMITED
The Directors of Atlas Arteria Limited (‘ATLAX’) declare that:
a) the Financial Report of ATLAX and its controlled entities (‘ATLAX Group’) and notes set out on pages 67 to 109:
are in accordance with the constitution of ATLAX and the Corporations Act 2001, including:
i)
ii)
complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements, and
giving a true and fair view of the financial position of the ATLAX Group as at 31 December 2020 and of its performance for
the year ended as on that date; and
b) there are reasonable grounds to believe that ATLAX will be able to pay its debts as and when they become due and payable.
The Directors confirm that the Financial Report also complies with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The Directors have been given the declaration by the Chief Executive Officer and Chief Financial Officer required by section 295A
of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Debra Goodin
Chairman
Atlas Arteria Limited
Melbourne, Australia
25 February 2021
Jean-Georges Malcor
Director
Atlas Arteria Limited
Melbourne, Australia
25 February 2021
ATLAS ARTERIA ANNUAL REPORT 2020 | 111
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS
Independent auditor’s report
To the stapled security holders of Atlas Arteria International Limited and Atlas Arteria Limited
Report on the audits of the financial reports
the Code.
Our audit approach
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
Our opinion
In our opinion:
The accompanying financial reports of:
Atlas Arteria International Limited (ATLIX) and its controlled entities and Atlas Arteria
Limited (ATLAX) and its controlled entities, together Atlas Arteria or ALX; and
Atlas Arteria Limited (ATLAX) and its controlled entities, together the ATLAX Group
are in accordance with the Corporations Act 2001, including:
Atlas Arteria invests in an international portfolio of toll road assets, the most significant of which are:
(a)
giving a true and fair view of the financial positions of Atlas Arteria and the ATLAX Group as at
31 December 2020 and of their financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The financial reports of Atlas Arteria and the ATLAX Group comprise:
the consolidated statements of financial position as at 31 December 2020
the consolidated statements of comprehensive income for the year then ended
the consolidated statements of changes in equity for the year then ended
the consolidated statements of cash flows for the year then ended
the notes to the financial reports, which include a summary of significant accounting policies
the directors’ declarations.
Basis for opinion
We conducted our audits in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
reports section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of Atlas Arteria and the ATLAX Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audits of the
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
112 | ATLAS ARTERIA ANNUAL REPORT 2020
An audit is designed to provide reasonable assurance about whether the financial reports are free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial reports.
We tailored the scope of our audits to ensure that we performed enough work to be able to give an
opinion on the financial reports as a whole, taking into account the geographic and management
structure of Atlas Arteria and the ATLAX Group, their accounting processes and controls and the
industry in which they operate.
APRR in France;
Dulles Greenway in the USA. Toll Road Investors Partnership II, L.P. ("Trip II") is the
concessionaire for Dulles Greenway; and
Warnowquerung GmbH & Co (“Warnow Tunnel”) in Germany.
We engaged with the auditors of APRR, Trip II and Warnow Tunnel to report to us in respect of their
audit procedures performed on the relevant toll road assets.
Materiality
Atlas Arteria materiality was $22.0 million, which represents approximately 2.5% of segment EBITDA. The
ATLAX Group materiality was $1.6 million, which represents approximately 1% of its total assets.
We applied these thresholds, together with qualitative considerations, to determine the scope of our audits
and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial reports as a whole.
We used segment EBITDA as the materiality benchmark for Atlas Arteria as this reflects the performance of
the underlying assets and the proportion of their results attributable to Atlas Arteria.
We used total assets as the materiality benchmark for the ATLAX Group because, in our view, it is the
primary metric against which its performance is most commonly measured. The ATLAX Group‘s interest in
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial reports are free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial reports.
We tailored the scope of our audits to ensure that we performed enough work to be able to give an
opinion on the financial reports as a whole, taking into account the geographic and management
structure of Atlas Arteria and the ATLAX Group, their accounting processes and controls and the
industry in which they operate.
Atlas Arteria invests in an international portfolio of toll road assets, the most significant of which are:
APRR in France;
Dulles Greenway in the USA. Toll Road Investors Partnership II, L.P. ("Trip II") is the
concessionaire for Dulles Greenway; and
Warnowquerung GmbH & Co (“Warnow Tunnel”) in Germany.
We engaged with the auditors of APRR, Trip II and Warnow Tunnel to report to us in respect of their
audit procedures performed on the relevant toll road assets.
Materiality
Atlas Arteria materiality was $22.0 million, which represents approximately 2.5% of segment EBITDA. The
ATLAX Group materiality was $1.6 million, which represents approximately 1% of its total assets.
We applied these thresholds, together with qualitative considerations, to determine the scope of our audits
and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial reports as a whole.
We used segment EBITDA as the materiality benchmark for Atlas Arteria as this reflects the performance of
the underlying assets and the proportion of their results attributable to Atlas Arteria.
We used total assets as the materiality benchmark for the ATLAX Group because, in our view, it is the
primary metric against which its performance is most commonly measured. The ATLAX Group‘s interest in
ATLAS ARTERIA ANNUAL REPORT 2020 | 113
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS
Dulles Greenway is recorded on its statement of financial position as an equity accounted investment.
We utilised a 2.5% threshold for Atlas Arteria and a 1% threshold for the ATLAX Group based on our
professional judgement, noting they are within the range of commonly acceptable thresholds.
Audit Scope
Our audits focused on where Atlas Arteria and the ATLAX Group made subjective judgements; for example,
significant accounting estimates involving assumptions and inherently uncertain future events.
We decided the nature, timing and extent of work that needed to be performed by other auditors operating
under our instruction (component auditors). For APRR, Dulles Greenway and Warnow Tunnel, we
determined the level of involvement we needed to have in the audit work performed by the component
auditors to enable us to conclude whether sufficient appropriate audit evidence had been obtained. Our
involvement included discussions, written instructions and reviewing a selection of their workpapers.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audits of the financial reports for the current period. The key audit matters were addressed in the
context of our audits of the financial reports as a whole, and in forming our opinions thereon, and we
do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committees.
Key audit matter
Carrying value of Atlas Arteria and the ATLAX
Group’s goodwill, tolling concession assets
and investments in associates
(Refer to notes 4.1, 4.2 and 3.2)
Atlas Arteria has investments in APRR, Dulles
Greenway and Warnow Tunnel. Each of these is a Cash
Generating Unit (CGU). These CGUs are reflected in
the financial report as follows:
An equity accounted investment in APRR of
$2.6 billion;
Tolling concession intangible assets totalling
$2.1 billion respect of the Dulles Greenway
and Warnow Tunnel concessions; and
Goodwill of $14.1 million in respect of
Warnow Tunnel.
How our audits addressed the key audit
matter
We performed the following procedures, amongst
others, for all CGUs:
Assessed whether the composition of each
CGU was consistent with our knowledge of
Atlas Arteria and the ATLAX Group’s
operations.
Assessed whether each CGU appropriately
included all directly attributable assets and
liabilities.
Evaluated Atlas Arteria and the ATLAX
Group’s assessments that there were
indicators of impairment during the year for
each CGU, taking into consideration the
requirements of Australian Accounting
Standards.
Assessed whether the valuation methodology,
114 | ATLAS ARTERIA ANNUAL REPORT 2020
Key audit matter
How our audits addressed the key audit
matter
The ATLAX Group has an equity accounted investment
which utilised a discounted cash flow model to
in the Dulles Greenway CGU of $104.7 million.
estimate the recoverable amount of each CGU,
The COVID-19 pandemic and its impact on traffic
Australian Accounting Standards.
was consistent with the requirements of
volumes and the wider economic environment was an
indicator of impairment in the current year.
Assessed whether the forecast cash flows in
the impairment assessments were appropriate
During the year Atlas Arteria and the ATLAX Group
by performing the following procedures,
performed impairment assessments on the carrying
amongst others:
value of the CGUs. The assessments of the recoverable
amounts of the assets were made on a fair value less
costs of disposal (FVLCD) basis, using discounted cash
flow models.
These assessments involved significant judgements
such as:
Forecasting future traffic volumes
Forecasting long-term inflation rates
Estimating toll price growth rates
Determining appropriate discount rates for
each CGU
Atlas Arteria recognised an impairment loss of $143.9
million on the Dulles Greenway concession as disclosed
in note 4.1.
The ATLAX Group recognised an impairment loss on
its equity accounted investment in Dulles Greenway of
$16.6 million (net of deferred tax impacts) as disclosed
in note 3.2.
The assessments of the carrying values of the goodwill,
tolling concession assets and investments in associates
for Atlas Arteria and the investments in associates for
the ATLAX Group were key audit matters due to the
significant carrying value of these assets, the size of the
impairment charges recognised against the Dulles
Greenway CGU and the judgements involved in
developing assumptions used in the discounted
cashflow models which determine the recoverable
o Comparing traffic volume growth
assumptions to third party economic
projections.
o Considered the ability of Atlas
Arteria and the ATLAX Group to
forecast accurately by comparing
previous traffic forecasts to actual
traffic volumes achieved.
o Comparing long-term inflation rate
assumptions to third party
projections.
o Comparing average toll price growth
rate assumptions to the latest
correspondence with the relevant
authority, contractual arrangements
and historical rate agreements where
relevant.
o With assistance from PwC valuation
experts, we evaluated the
appropriateness of the discount rate
used for each CGU. This assessment
was performed with reference to
externally derived data where
possible, including market
expectations of investment return,
projected economic growth, interest
rates, valuations of comparable
assets and asset specific
characteristics.
Key audit matter
How our audits addressed the key audit
matter
The ATLAX Group has an equity accounted investment
in the Dulles Greenway CGU of $104.7 million.
The COVID-19 pandemic and its impact on traffic
volumes and the wider economic environment was an
indicator of impairment in the current year.
During the year Atlas Arteria and the ATLAX Group
performed impairment assessments on the carrying
value of the CGUs. The assessments of the recoverable
amounts of the assets were made on a fair value less
costs of disposal (FVLCD) basis, using discounted cash
flow models.
These assessments involved significant judgements
such as:
Forecasting future traffic volumes
Forecasting long-term inflation rates
Estimating toll price growth rates
Determining appropriate discount rates for
each CGU
Atlas Arteria recognised an impairment loss of $143.9
million on the Dulles Greenway concession as disclosed
in note 4.1.
The ATLAX Group recognised an impairment loss on
its equity accounted investment in Dulles Greenway of
$16.6 million (net of deferred tax impacts) as disclosed
in note 3.2.
The assessments of the carrying values of the goodwill,
tolling concession assets and investments in associates
for Atlas Arteria and the investments in associates for
the ATLAX Group were key audit matters due to the
significant carrying value of these assets, the size of the
impairment charges recognised against the Dulles
Greenway CGU and the judgements involved in
developing assumptions used in the discounted
cashflow models which determine the recoverable
which utilised a discounted cash flow model to
estimate the recoverable amount of each CGU,
was consistent with the requirements of
Australian Accounting Standards.
Assessed whether the forecast cash flows in
the impairment assessments were appropriate
by performing the following procedures,
amongst others:
o Comparing traffic volume growth
assumptions to third party economic
projections.
o Considered the ability of Atlas
Arteria and the ATLAX Group to
forecast accurately by comparing
previous traffic forecasts to actual
traffic volumes achieved.
o Comparing long-term inflation rate
assumptions to third party
projections.
o Comparing average toll price growth
rate assumptions to the latest
correspondence with the relevant
authority, contractual arrangements
and historical rate agreements where
relevant.
o With assistance from PwC valuation
experts, we evaluated the
appropriateness of the discount rate
used for each CGU. This assessment
was performed with reference to
externally derived data where
possible, including market
expectations of investment return,
projected economic growth, interest
rates, valuations of comparable
assets and asset specific
characteristics.
ATLAS ARTERIA ANNUAL REPORT 2020 | 115
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS
Key audit matter
amounts of the CGUs.
Consolidation of subsidiaries and equity
accounting of associates
(Refer to notes 3.2 and 5.3)
Atlas Arteria applies equity accounting to its
investment in APRR and consolidates its investments
in Dulles Greenway and Warnow Tunnel. The ATLAX
Group applies equity accounting to its investment in
Dulles Greenway. Both Atlas Arteria and the ATLAX
Group exercise judgement in the application of
Australian Accounting Standards in determining the
basis of accounting for their investments.
In the application of equity and consolidation
accounting, management is required to make a number
of adjustments to the underlying financial information
of each asset to ensure alignment to Australian
Accounting Standards and to Atlas Arteria and the
ATLAX Group’s accounting policies.
Significant adjustments also include the translation of
foreign operations accounted for in currencies other
than Australian Dollars. In the period, a loss of $101.4
million was recognised directly in equity by Atlas
Arteria in respect of the translation of foreign
operations. A loss of $9.5 million was recognised
directly in equity by the ATLAX Group. (See note 5.3).
This was a key audit matter because certain
adjustments are material and complex in nature, such
as adjusting the results of international subsidiaries
and investments in associates prepared using local
accounting policies to reflect Australian Accounting
How our audits addressed the key audit
matter
Performed sensitivity analysis on the key
assumptions used in the impairment models.
Tested the mathematical accuracy of the
impairment models on a sample basis, and
Evaluated the adequacy of the disclosures
made in notes 4.1, 4.2 and 3.2, in light of the
requirements of Australian Accounting
Standards.
We considered the appropriateness of Atlas Arteria and
the ATLAX Group’s conclusions on the application of
equity accounting and consolidation of investments in
light of the requirements of Australian Accounting
Standards. In doing so, we read and developed an
understanding of the contractual arrangements for
each investment.
We developed an understanding of operational
developments and local accounting policies of the
subsidiaries and associates and the nature and extent of
any accounting standard or accounting policy
adjustments required to align with those of Atlas
Arteria or the ATLAX Group.
On a sample basis, we reperformed the calculation of
the adjustments to assess consistency with this
understanding and to check for mathematical accuracy.
Upon receipt of audited financial information for
Dulles Greenway and Warnow Tunnel, we tested
management’s calculations of adjustments on a sample
basis, checking for mathematical accuracy and
consistency with the Atlas Arteria and ATLAX Group
accounting policies. These adjustments impact:
Atlas Arteria’s consolidated statement of
comprehensive income and consolidated
statement of financial position and
the ATLAX Group’s share of associates net
profits or losses and carrying value of Dulles
116 | ATLAS ARTERIA ANNUAL REPORT 2020
Key audit matter
How our audits addressed the key audit
Standards.
matter
Greenway.
Upon receipt of audited financial information for
APRR, we tested management’s calculation of
adjustments, checking for mathematical accuracy and
consistency with Atlas Arteria accounting policies.
These adjustments impact Atlas Arteria’s share of net
profits from equity accounted investments and the
carrying value of the equity accounted investment in
APRR.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2020, but does not include
the financial reports and our auditor’s reports thereon.
Our opinions on the financial reports do not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audits of the financial reports, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial reports or our knowledge obtained in the audits, or otherwise appears to be materially
misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
these auditor’s reports, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of ATLIX and ATLAX are responsible for the preparation of financial reports that give a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial reports that give a true and fair view and are free from material misstatement, whether due to
fraud or error.
In preparing the financial reports, the directors are responsible for assessing the ability of Atlas Arteria
and the ATLAX Group to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend to
Key audit matter
How our audits addressed the key audit
matter
Standards.
Greenway.
Upon receipt of audited financial information for
APRR, we tested management’s calculation of
adjustments, checking for mathematical accuracy and
consistency with Atlas Arteria accounting policies.
These adjustments impact Atlas Arteria’s share of net
profits from equity accounted investments and the
carrying value of the equity accounted investment in
APRR.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2020, but does not include
the financial reports and our auditor’s reports thereon.
Our opinions on the financial reports do not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audits of the financial reports, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial reports or our knowledge obtained in the audits, or otherwise appears to be materially
misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
these auditor’s reports, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of ATLIX and ATLAX are responsible for the preparation of financial reports that give a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial reports that give a true and fair view and are free from material misstatement, whether due to
fraud or error.
In preparing the financial reports, the directors are responsible for assessing the ability of Atlas Arteria
and the ATLAX Group to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend to
ATLAS ARTERIA ANNUAL REPORT 2020 | 117
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS
liquidate Atlas Arteria or the ATLAX Group or to cease operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities for the audits of the financial reports
Our objectives are to obtain reasonable assurance about whether the financial reports as a whole are
free from material misstatement, whether due to fraud or error, and to issue auditor’s reports that
include our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial reports.
A further description of our responsibilities for the audits of the financial reports is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 42 to 59 of the directors’ reports for the
year ended 31 December 2020.
In our opinion, the remuneration report of ATLIX and ATLAX for the year ended 31 December 2020
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of ATLIX and ATLAX are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audits conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Ben Gargett
Partner
Melbourne
25 February 2021
118 | ATLAS ARTERIA ANNUAL REPORT 2020
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 42 to 59 of the directors’ reports for the
year ended 31 December 2020.
In our opinion, the remuneration report of ATLIX and ATLAX for the year ended 31 December 2020
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of ATLIX and ATLAX are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audits conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Ben Gargett
Partner
Melbourne
25 February 2021
ATLAS ARTERIA ANNUAL REPORT 2020 | 119
FINANCIAL REPORTDIRECTORS’ REPORTREMUNERATION REPORTFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITY REPORTOUR BUSINESS SECURITYHOLDER INFORMATION
As at 31 January 2021
Distribution of securities
Investor ranges
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 Over
Total
Investors with less than the minimum marketable parcel 1
1. Minimum marketable parcel is $500.00 equating to 79 shares at $6.33 per security
Twenty largest investors
Investor
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
3 CITICORP NOMINEES PTY LIMITED
4 NATIONAL NOMINEES LIMITED
5 BNP PARIBAS NOMINEES PTY LTD
6 BNP PARIBAS NOMS PTY LTD
7 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
8 NETWEALTH INVESTMENTS LIMITED
9 AUSTRALIAN UNITED INVESTMENT COMPANY LIMITED
10 DIVERSIFIED UNITED INVESTMENT LIMITED
11 SANDHURST TRUSTEES LTD
12 CITICORP NOMINEES PTY LIMITED
13 UBS NOMINEES PTY LTD
14 BNP PARIBAS NOMS (NZ) LTD
15 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
16 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
17 CUSTODIAL SERVICES LIMITED
18 DJERRIWARRH INVESTMENTS LIMITED
19 PETER & LYNDY WHITE FOUNDATION PTY LTD
20 INVIA CUSTODIAN PTY LIMITED
Total
Details of substantial stapled securityholders
Holder
Date of most recent substantial holder notice
Lazard Asset Management
Pendal Group Limited
The Vanguard Group, Inc
Blackrock Group
18 September 2020
6 May 2020
2 April 2020
5 June 2020
120 | ATLAS ARTERIA ANNUAL REPORT 2020
Holders
Total securities
% of issued
securities
11,666
9,222
2,680
2,304
126
25,998
2,283
4,521,315
22,763,616
18,949,260
52,848,842
859,935,193
959,018,226
55,873
0.47
2.37
1.98
5.51
89.67
100.0
0.01%
Number of
securities
% of issued
securities
427,750,284
156,069,149
75,035,774
58,216,787
36,945,517
23,343,966
11,252,927
7,607,306
5,513,263
5,000,000
3,399,930
3,122,145
3,003,835
2,903,488
2,553,443
1,708,660
1,699,863
1,633,696
1,530,127
1,373,325
44.60
16.27
7.82
6.07
3.85
2.43
1.17
0.79
0.57
0.52
0.35
0.33
0.31
0.30
0.27
0.18
0.18
0.17
0.16
0.14
829,663,485
86.51
Number of
securities
% of issued
securities
98,378,884
52,937,306
52,753,348
49,729,592
10.26%
6.02%
6.00%
5.25%
Computershare Investor Services Pty Ltd
REGISTRY
GPO Box 2975
Melbourne VIC 3001
Australia
Telephone:
(Australia) 1800 267 108
(Overseas) +61 3 9415 4053
Mon-Fri 8.30am – 7pm AEST
Website: www.computershare.com/au
Facsimile: +61 (0) 3 9473 2500
CORPORATE DIRECTORY
ATLAS ARTERIA LIMITED
Level 5, 141 Flinders Lane
Melbourne VIC 3000
Australia
Telephone (Australia): 1800 621 694
Telephone (International): +61 (0)438 493 692
Email: investors@atlasarteria.com
Website: www.atlasarteria.com
Debbie Goodin, Non-Executive, Independent Chairman
Graeme Bevans, Executive Director
David Bartholomew, Non-Executive, Independent Director
Jean-Georges Malcor, Non-Executive, Independent Director
Directors
Secretary
Clayton McCormack, General Counsel and Company Secretary
ATLAS ARTERIA INTERNATIONAL LIMITED
4th Floor, Cedar House
41 Cedar Avenue
Hamilton HM12 Bermuda
Directors
Jeffrey Conyers, Non-Executive, Independent Chairman
Debbie Goodin, Non-Executive, Independent Director
Fiona Beck, Non-Executive Independent Director
Caroline Foulger, Non-Executive, Independent Director
Andrew Cook, Non-Executive, Independent Director
Secretary
Sheena Dottin
Photography Credits:
Page 2 – ADELAC Photographer: Leimdorfer Gilles
Warnow Tunnel Photographer: Trent Perrett
Dulles Greenway: source David Madison Photography
Page 3 – APPR Photographer: Payan Mathieu
Page 5 – Photographer: Erolf Productions Photographer: Sémaphore
Page 11 – Dulles Greenway: source David Madison Photography
Page 12 – APRR Photographer: Leimdorfer Gilles
Page 14 – APRR Photographer: Christophe Huret
Page 16 – Warnow Tunnel
Page 18 – Dulles Greenway: source David Madison Photography
Page 25 – Dulles Greenway: source David Madison Photography
Page 29 – Photographer: Erolf Productions Photographer: WZA
Page 23 – Dulles Greenway
Page 26 – Warnow Tunnel
Page 30 – Dulles Greenway
REGISTRY
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne VIC 3001
Australia
Telephone:
(Australia) 1800 267 108
(Overseas) +61 3 9415 4053
Mon-Fri 8.30am – 7pm AEST
Website: www.computershare.com/au
Facsimile: +61 (0) 3 9473 2500
CORPORATE DIRECTORY
ATLAS ARTERIA LIMITED
Level 5, 141 Flinders Lane
Melbourne VIC 3000
Australia
Telephone (Australia): 1800 621 694
Telephone (International): +61 (0)438 493 692
Email: investors@atlasarteria.com
Website: www.atlasarteria.com
Directors
Debbie Goodin, Non-Executive, Independent Chairman
Graeme Bevans, Executive Director
David Bartholomew, Non-Executive, Independent Director
Jean-Georges Malcor, Non-Executive, Independent Director
Secretary
Clayton McCormack, General Counsel and Company Secretary
ATLAS ARTERIA INTERNATIONAL LIMITED
4th Floor, Cedar House
41 Cedar Avenue
Hamilton HM12 Bermuda
Directors
Jeffrey Conyers, Non-Executive, Independent Chairman
Debbie Goodin, Non-Executive, Independent Director
Fiona Beck, Non-Executive Independent Director
Caroline Foulger, Non-Executive, Independent Director
Andrew Cook, Non-Executive, Independent Director
Secretary
Sheena Dottin
Photography Credits:
Page 2 – ADELAC Photographer: Leimdorfer Gilles
Warnow Tunnel Photographer: Trent Perrett
Dulles Greenway: source David Madison Photography
Page 3 – APRR Photographer: Payan Mathieu
Page 5 – Photographer: Erolf Productions Photographer: Sémaphore
Page 11 – Dulles Greenway: source David Madison Photography
Page 12 – APRR Photographer: Leimdorfer Gilles
Page 14 – APRR Photographer: Christophe Huret
Page 16 – Warnow Tunnel
Page 18 – Dulles Greenway: source David Madison Photography
Page 23 – Dulles Greenway
Page 25 – Dulles Greenway: source David Madison Photography
Page 26 – Warnow Tunnel
Page 29 – Photographer: Erolf Productions Photographer: WZA
Page 30 – Dulles Greenway
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