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ANNUAL
REPORT
2022
A year of consistent execution
and business transformation
2022 Total Shareholder Return1
S&P/ASX 200
-1.1%
Atlas Arteria
8.7%
-2
0
2
4
6
8
10
Total Shareholder Return since internalisation2
S&P/ASX 200
38.0%
Atlas Arteria
42.1%
0
10
20
30
40
50
60
Contents
Key Business Highlights
The Atlas Arteria Business
Chairpersons’ Review
From the CEO and Managing Director
Executive Team
History of Atlas Arteria
Strategic Framework
Business Performance
Sustainability
Risk Management
Corporate Governance
Financial Overview
Directors’ Reports
Remuneration Report
Financial Report
Securityholder Information
Corporate Directory
1
2
4
6
8
9
10
12
22
28
31
36
43
48
70
120
121
Acknowledgement of Country
Atlas Arteria acknowledges the Traditional Custodians of country
throughout Australia, and their connections to land, sea and community.
We pay our respects to their Elders past, present and emerging and extend
that respect to all Aboriginal and Torres Strait Islander peoples today.
As a global owner, operator and developer of toll roads, we extend our
respect to the First Nations custodians in every location where we live and
work and to their past, present and ongoing contributions, which enrich our
lives and communities. Keeping communities connected is at the heart of
what we do; and we do so guided by our values, which encourage respect
for all people in every interaction.
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 1,
180 Flinders Street, Melbourne, VIC 3000, Australia.
1. Source: Refinitiv. Total shareholder return from 31 December 2021 to 31 December 2022.
2. Source: Refinitiv. Total shareholder return from 15 May 2018 to 31 December 2022.
KEY BUSINESS HIGHLIGHTS
Acquisition of Chicago Skyway extended
Atlas Arteria’s average concession life to
37 years 1
€410m
Investment Plan signed
with French Government
in January 2023
80%of employees would recommend
Atlas Arteria as a great place
to work, up from 76% in 2021 2
First stand alone Sustainability Report released
in April 2022 providing more information on key metrics
100%of APRR and AREA
service areas equipped
with electric vehicle
charging stations
Atlas Arteria ranked
2nd in the
ANZ transport sector
– GRESB Public Disclosure Report (2022)
Maintained
40%gender balance 3
APRR network
expanded, with
ownership of
A79 fi nalised
and tolling commenced
Weighted average traffi c
performance in 2022,
including Chicago Skyway 4:
7.8%
higher than 2021
and 0.5% below 2019 5
Weighted average toll revenue
performance in 2022, including
Chicago Skyway 4:
9.0%
higher than 2021
and 4.7% above 2019 6
Record securityholder
distribution per security:
40 cps7
2022
40.0 cps
2021
36.0 cps
2020
24.0 cps
2019
15.0 cps
APRR net profi t after tax:
€1,056m
2022
€1,056m
2021
€933m
2020
€628m
2019
€875m
1. Weighted average concession life based on equity value contribution to consolidated business as at 11 September 2022.
2. 2022 corporate employee survey result.
3. Across the Boards, senior executives (i.e. Executive Team and senior direct reports, including CEOs and MDs of wholly and majority owned businesses)
and the corporate team.
4. Atlas Arteria completed the acquisition of a 66.67% majority interest in the Chicago Skyway on 1 December 2022, however, data for the full period has been provided
for comparative purposes to allow comparisons with prior periods.
5. Traffic growth is weighted by Atlas Arteria’s beneficial interests in the revenue from each business, in AUD using the average exchange rates in the period.
6. Toll revenue growth is calculated using the respective businesses local currencies, converted to AUD.
7. Includes H2 2022 distribution guidance of 20.0 cps which is subject to continued business performance, movements in foreign exchange rates, and other future events.
ATLAS ARTERIA ANNUAL REPORT 2022 | 1
THE ATLAS ARTERIA BUSINESS
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
OUR VALUES
To provide the communities in which we operate
with high quality, well maintained infrastructure
and associated amenities that:
− enhance safety;
− provide economic benefits 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 guide the decisions we make and the way
we behave as we work together towards our vision.
In living our values, we aim to 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 five 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
We are always focused on
delivering safe outcomes
for our employees,
contractors, customers
and visitors to our offices
and roads; because
nothing is so important
that we cannot take the
time to do it safely.
Transparency
in all we do
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.
Engage for
better outcomes
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.
2 | ATLAS ARTERIA ANNUAL REPORT 2022
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Today the Atlas Arteria Group consists of five toll road businesses
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.
Rostock, Germany
Warnow Tunnel
Virginia, United States
Dulles Greenway
United States HQ
France
APRR/ADELAC
Chicago, United States
Chicago Skyway
Luxembourg
European HQ
Australia
Global Corporate HQ
ATLAX Board
Bermuda
ATLIX Board
APRR GROUP
ADELAC
Ownership: 31.14%
Ownership: 31.17%
2,386km motorway
network in Eastern
France
20km commuter road
connecting Annecy
to Geneva
WARNOW
TUNNEL
Ownership: 100%
2.1km road and tunnel
in Rostock, Germany
CHICAGO
SKYWAY
Ownership: 66.67%
DULLES
GREENWAY
Ownership: 100%2
12.5km toll road
connecting Chicago and
Northwest Indiana
22km commuter
route into the greater
Washington DC area
2035 concession expiry1
2060 concession expiry
2053 concession expiry
2104 concession expiry
2056 concession expiry
P12
P12
P16
P18
P20
1. APRR concession expires in November 2035, AREA concession expires in September 2036, A79 concession expires in February 2068.
2. 100% economic ownership.
ATLAS ARTERIA ANNUAL REPORT 2022 | 3
CHAIRPERSONS’
REVIEW
Dear Securityholder,
We are very pleased to share the 2022 Annual Report, on what
has been a significant and transformative year for Atlas Arteria.
Our financial performance for 2022 was strong, enabling us
to guide to record distributions to you, our securityholders.
We made significant strategic progress at APRR, expanding
the network, and at Dulles Greenway, engaging with key
stakeholders on toll reform.
In September, we announced a landmark achievement with
the acquisition of a majority interest in Chicago Skyway. This
acquisition has transformed Atlas Arteria into a stronger, larger,
more diverse business that remains sharply focused on long-
term value creation.
Atlas Arteria has had a strong start to 2023, signing the fourth
APRR Investment Plan with the French Government in January.
A strong financial position
Overall, Atlas Arteria delivered against its key financial metrics,
with a 9.0% increase in weighted average toll revenue and
a 10.3% increase in weighted average EBITDA on 2021. This
reflects improving traffic levels post the relaxation of COVID-19
restrictions and increases in toll revenue.
On a total shareholder return (TSR) basis, Atlas Arteria
outperformed the S&P/ASX 200 index, returning almost 9% to
securityholders via security price increases and distributions
during the year. Our record 40 cents per security distribution
guidance for the 2022 year was driven by the strong performance
of APRR. Given the additional number of securities on issue
following the Chicago Skyway equity raise, the H2 2022
distribution is expected to be supported by available excess
cash held on balance sheet.
A significant acquisition
The acquisition of a majority interest in Chicago Skyway
represented a rare and compelling opportunity for Atlas Arteria.
The Chicago Skyway is a business we know well as a result of
previous ownership. This was beneficial during the due diligence
process and, in turn, lowered the acquisition risk.
The acquisition met all three of our investment criteria: it is
value accretive, given it is expected to deliver an internal rate of
return exceeding our risk-adjusted cost of equity at the time of
the acquisition; it doubles our weighted average concession life
from 18 to 37 years; and cash flows from the existing businesses
together with Chicago Skyway are expected to provide for long-
term sustainable distributions.
In addition to squarely meeting our three investment criteria
and further strengthening our balance sheet, this high-quality
business provides financial, geographical, currency and
distribution diversification benefits. Chicago Skyway balances
our business, de-risking our financial reliance on APRR. Our
enlarged capital base will position us well to participate in any
future tender process for the concessions in France should the
Government undertake such a process.
Our completion of this acquisition has created a platform for
long-term sustainable growth for you as a securityholder.
It further strengthens our position, profile and influence as
a global operator of toll roads.
On behalf of the Boards, thank you for your support of the equity
raise funding this acquisition. To all new securityholders who
have joined the register, welcome.
Distribution guidance for 2023
We are committed to providing our securityholders with
sustainable distributions funded from operating business cash
flows. Post acquisition, cash flows from our existing businesses,
including Chicago Skyway, are expected to provide for long-term
sustainable distributions.
Our 2023 distribution guidance of 40 cents per security
represents a sustainable level moving forward1. In the first few
years post acquisition of the Chicago Skyway, we will utilise
capital releases from that business to smooth distributions,
but future potential re-gears will not be required to maintain
distributions at the 40 cents per security level.
Ongoing commitment to sustainable outcomes
We continue to make good progress across our sustainability
priority areas: safety; our people; customers and community;
and environmental stewardship. A summary of our progress
is provided on pages 22 to 27 of this report and full details will
be provided in our second Sustainability Report due for release
in April.
Nothing is more important to us than our people and customers
arriving home safely. It therefore saddens us to report an
accident at APRR during the year, involving three employees
being struck by a van. The accident resulted in one fatality and
one serious injury, the effects of which have been deeply felt
across the business. Support has been provided to employees
and their families and we remain steadfastly focused on
preventative measures and learnings from this tragedy.
1. Guidance subject to continued business performance, movements in foreign exchange rates, and other future events (including refinancing at Chicago Skyway).
4 | ATLAS ARTERIA ANNUAL REPORT 2022
This year the Boards have focused on the risks and opportunities
that climate change may pose to Atlas Arteria. We made good
progress in the first year of a multi-year program to report in
line with the Task Force on Climate-related Financial Disclosures
(TCFD) recommendations.
With initiatives undertaken across our businesses to reduce our
greenhouse gas footprint and increase our use of renewable
energy, we are making headway toward our target of a 25%
reduction in scope 1 and 2 emissions by 2025, and 46% by 2030
against a 2019 baseline.1
We continue to make good progress establishing baselines for
customer and employee satisfaction, with insights from surveys
empowering us to keep delivering improved outcomes. We are
thrilled to report that for the eighth consecutive year, APRR was
named France’s Best Employer in its sector by Capital magazine.
It was also pleasing to see our efforts recognised in key
benchmarks such as the GRESB (Global ESG Benchmark for
Real Assets) Infrastructure Public Disclosure Report, with
Atlas Arteria ranking second in the Australia and New Zealand
transport sector in 2022.
Over the coming year, we look forward to working with the
team at Chicago Skyway to further develop their approach
to sustainability.
We’re committed to making continued progress across our
business into 2023 and beyond.
Welcome to IFM Global Infrastructure Fund (IFM)
IFM became a significant investor this year, and fully participated
in the equity raise funding the Chicago Skyway acquisition.
IFM is an extremely successful Australian-grown global
fund manager with deep experience and understanding of
infrastructure.
Following discussions with IFM, it is proposed that Ken Daley
will stand for election as a Director of ATLAX at the 2023 AGM
in May and in the interim will attend ATLAX Board meetings as
an observer. Ken is a globally recognised toll road leader and
we welcome his contribution to our business.
Board renewal
Board renewal continued to be a focus in 2022, including the
succession of the ATLIX Chair role. On 1 March 2023, Jeff
Conyers will retire as Chair and Director of ATLIX, and Fiona
Beck will become the Chair of ATLIX. At this time, the Board of
ATLIX will reduce from five to four members.
Fiona has been an Independent Director of ATLIX since September
2019 and the Chair of the People and Remuneration Committee
since May 2020. She has significant experience as a CEO, director
and chair in public and private organisations, especially in the
infrastructure, technology and telecommunications sectors, and
we congratulate her on her appointment.
In addition, John Wigglesworth joined the ATLAX Board on
1 January 2023 following the retirement of Ariane Barker.
Outlook
Our business continues to recover from the effects of COVID-19,
demonstrating its resilience and supporting a positive outlook
for 2023 and beyond. Your Boards remain committed to
leveraging our business’s unique strengths and to delivering
sustainable, long-term value for you, our valued securityholder.
On behalf of the Boards, thank you to our customers, local
communities and stakeholders for your continued support.
Thank you also to all Atlas Arteria staff who have made this
success possible.
Atlas Arteria now enters a new era; one that is both exciting and
that offers sustained value. We’re so pleased you are a part of it.
Debbie Goodin
Chair
Atlas Arteria Limited
Jeffrey Conyers
Chair
Atlas Arteria International Limited
A message from Jeff Conyers
This is my final Annual Report as the Chair of ATLIX,
as I will retire with effect from 1 March 2023.
I am tremendously proud of this business and all our
achievements since I joined as a Director and Chair
of ATLIX upon its establishment in December 2009.
During those 13 years, this business has reached many
important milestones including the restructuring of the
company, internalisation of management, and other strategic
developments including the increased ownership in APRR
and the recent acquisition of a majority interest in the
Chicago Skyway.
These successes could not have been achieved without the
commitment of a relatively small, very hardworking and
talented team that has always been focused on growing value
for all our stakeholders.
I would like to take this opportunity to thank my fellow Board
members as well as the broader team, and wish them all the
best in their ongoing endeavours, and the ongoing success of
Atlas Arteria.
1. Chicago Skyway is currently excluded from these targets. Greenhouse gas emissions assessment for Chicago Skyway will commence in 2023.
ATLAS ARTERIA ANNUAL REPORT 2022 | 5
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS FROM THE CEO AND
MANAGING DIRECTOR
Dear Securityholder,
2022 has been a landmark year for Atlas Arteria. We have
executed well at an operational level and driven transformative
strategic change to support sustainable, long-term value for our
stakeholders.
Our businesses demonstrated their resilience, continuing the
recovery post COVID-19 and benefitting from this period of
significant macroeconomic change. Our overall traffic numbers
were up 7.8% on 2021 driven by rebounding traffic at APRR and
ADELAC. While the increase in traffic towards pre-COVID levels
has been more gradual at Dulles Greenway, it is showing signs
of improvement.
We continue to expand and add value to the APRR network
and to strengthen our relationships with our joint venture
partner Eiffage and the French Government. We were pleased
to commence tolling on the recently completed A79 and receive
government approval on APRR’s €410 million Investment Plan;
the fourth of its kind for us.
Notably, we also reached financial close on the transformative
acquisition of a majority interest in Chicago Skyway in December
2022. It is our privilege to manage this essential transport link
and critical piece of infrastructure in partnership with Ontario
Teachers’ Pension Plan (Ontario Teachers’).
Across the business, we are positively leveraged to inflation,
with material toll increases to support revenue at APRR,
Warnow Tunnel and Chicago Skyway in 2023. A high proportion
of fixed-rate debt also provides further protection from
macroeconomic change for Atlas Arteria, by limiting the impact
of rising interest rates.
Our financial position is strong and we continue to deliver value
in the face of changing global macroeconomic dynamics, which
I am confident we will continue to do into 2023.
Safety-first in everything we do
During the year, a series of safety audits were undertaken
across our businesses, and we rolled out our streamlined
approach to safety reporting at all sites. APRR’s upgrade of
the A79 to motorway standards has vastly improved safety
conditions along a particularly accident-prone road, and at
Warnow Tunnel we’ve implemented changes in response to
dangerous driving practices at the toll plaza (see case study
on page 17).
Business performance
APRR and ADELAC
APRR continues to underpin distributions for the business,
contributing the majority of our proportional revenue. Its results
for the year were impressive, with traffic, toll revenue and
EBITDA passing pre-COVID levels, up 8.2%, 8.8% and 10.1%
versus 2021 respectively.
Demand on this network remains high, with strong leisure
travel delivering bumper winter seasonal traffic and growing
international trade supporting a steady stream of heavy vehicle
traffic. The network remains resilient to France’s economic
challenges, in particular higher retail fuel prices during the year.
The A79 and A480 motorway upgrades were completed and the
delivery of a barrier-free tolling system on the A43 and A79 will
translate to improved customer outcomes and a reduction
in CO2 emissions.
APRR continues to value and benefit from its ongoing
relationship with the French Government, demonstrated
by the approval of the Investment Plan in January 2023.
The €410 million capital investment plan will support the
government’s environmental agenda and deliver motorway
upgrades. In turn, the government has approved supplemental
toll increases for APRR and AREA between 2023 to 2026,
amongst other compensation measures.1
1. APRR and AREA decided that the supplemental toll increases would exceptionally not be applied in 2023.
6 | ATLAS ARTERIA ANNUAL REPORT 2022
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Warnow Tunnel
Good progress was made at Warnow Tunnel in terms of both
traffic performance and the delivery of improved safety and
customer initiatives during the year. Pandemic restrictions
during the first half (in response to the Omicron variant) and the
German Government’s three-month, temporary public transport
pass negatively impacted traffic, however, these impacts were
partially offset by benefits to traffic as a result of roadworks
on alternate routes. Overall, traffic was up 3.4% and toll revenue
and EBITDA up 5.2% and 5.6% on 2021 respectively.
We also delivered clearer overhead signage at the toll plaza,
along with additional credit card terminals and OSCARD
readers, streamlining the experience for our customers and
improving safety.
Dulles Greenway
Recovery post-COVID at Dulles Greenway has been more gradual
than expected, as many continued to work from home, and heavy
snowfall prevented road travel early in the year. The business is
showing signs of improvement, with the fourth quarter of 2022
delivering the highest number of trips since the beginning of
the COVID-19 pandemic. Overall, traffic at Dulles Greenway was
up by 6.6% and toll revenue and EBITDA up 12.0% and 16.5%
respectively versus 2021, while still down on 2019 levels.
We undertook our first customer satisfaction survey in May
which provided insights into opinions and attitudes towards
Dulles Greenway. Overwhelmingly, travellers were satisfied
with the overall experience (91%).
In February 2023, legislation will be considered by the Virginia
General Assembly which would authorise the Department
of Transportation to negotiate the potential implementation
of distance-based tolling on Dulles Greenway. This would
deliver mutually beneficial outcomes for our customers
and the business.
A smooth transition for Chicago Skyway
We are now focused on a smooth ownership transition for
Chicago Skyway, as well as identifying opportunities to add
further value to this business. We recognise the privilege of
managing and operating this infrastructure and its importance
to the community. In light of our deep understanding of the
business, gained through prior ownership, we are confident
that we are well placed to ensure its ongoing success. We are
working collaboratively with our partner Ontario Teachers’,
who have retained their 33% interest in Chicago Skyway.
We have confidence in the management team on the ground at
the Chicago Skyway and will work alongside them to add value
through our operational capability. The benefits we can provide
include our whole-of-life approach to asset management,
along with our focus on modernising operations via improved
technology and automation. We will also look to optimise the
capital structure, with significant headroom to deliver capital
releases over time whilst maintaining an investment grade
credit rating.
Traffic at Chicago Skyway was 2.2% ahead of 2021. Both light
and heavy traffic were positively impacted for part of 2022 by
roadworks along the competing route. In addition, a steady
increase in office-based work in Chicago also positively
impacted traffic. Toll revenue and EBITDA were up 5.1% and
4.8% on 2021 respectively.
A GLOBAL AND DIVERSE TEAM: RESULTS OF OUR
DIVERSITY, EQUITY AND INCLUSION DIAGNOSTIC
First year we have undertaken
a diversity, equity and inclusion
diagnostic at the corporate level
87% participation
10+ languages
profi ciently spoken
44% female
7% of our people identify
as two or more ethnicities
Looking forward
Our focus for the next year or so is clear. In addition to
transitioning Chicago Skyway to an Atlas Arteria business, we
will continue to execute our organic growth opportunities at
APRR and Dulles Greenway, building on our progress in 2022.
We will continue to have ongoing dialogue with the French
Government on achieving their road development and
environmental objectives in exchange for toll increases and/
or concession extensions.
I would like to extend my thanks to our people. I am proud
of our truly global, diverse, hard-working team at Atlas Arteria.
Their tireless efforts allow us to continue to add value to the
company and deliver on our commitment to maximise value
for our securityholders.
As we stand at the beginning of this new and transformative era
for Atlas Arteria, we look forward to continuing to add value for
many years to come.
Graeme Bevans
CEO and Managing Director
Atlas Arteria
ATLAS ARTERIA ANNUAL REPORT 2022 | 7
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.
David Collins
Chief Financial Officer
An experienced CFO having spent over 20 years specialising in infrastructure and
transport businesses globally across finance and commercial roles. Passionate about
making strategic and financial decisions that add value for all stakeholders.
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.
Catherine Brain
People and Culture
An executive with over 20 years of people and culture leadership experience including
driving strategic change programs for ASX100 companies. Passionate about people,
culture and transformation.
Jim Dickson
Corporate Development and Strategy Executive
An executive with extensive experience in the infrastructure sector with a focus on
corporate development. Passionate about delivering on Atlas Arteria’s strategic
framework to provide long-term sustainable growth for securityholders.
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.
8 | ATLAS ARTERIA ANNUAL REPORT 2022
HISTORY OF ATLAS ARTERIA
Atlas Arteria (ALX), previously known as Macquarie Atlas Roads (MQA),
was created out of the reorganisation of Macquarie Infrastructure Group
into two separate ASX listed toll road groups in 2010.
Since separation from Macquarie, Atlas Arteria has demonstrated its capability to deliver growth and create value for securityholders.
2010
JANUARY Macquarie Atlas Roads
(ASX:MQA) commences trading on the ASX.
2017
MARCH Macquarie Atlas Roads
(ASX: MQA) admitted entry to the
S&P/ASX 100 Index.
MAY Completion of the acquisition of the
remaining 50% estimated economic interest
in the Dulles Greenway, increasing Atlas
Arteria’s economic interest to 100%1.
SEPTEMBER Announced the acquisition
of an additional 4.86% interest in APRR,
increasing ownership to 25%.
NOVEMBER Announcement that MQA
would internalise.
2019
JUNE Eiffage and APRR consortium
selected as preferred bidder for the A79
(also known as RCEA) project.
NOVEMBER Announced the APRR
transaction to increase Atlas Arteria’s
ownership in APRR and ADELAC by 6.14%
to 31.14% and 31.17% respectively, 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 $1.35bn was
undertaken to fund the transaction.
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).
SEPTEMBER Completion of the acquisition
of the remaining 30% equity interest in
Warnow Tunnel, increasing Atlas Arteria’s
interest to 100%.
NOVEMBER APRR and AREA awarded a
€187m capital investment plan (the 2018
Motorway Investment Plan) by the French
Government, compensated through
supplemental toll increases.
2020
MARCH APRR took over the operations of
the A79 in preparation for the construction
of the A79 project.
JUNE/JULY Completed an equity raising
for $495m. 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 security
register.
2021
MARCH Completion of the Warnow Tunnel
capital restructure diversifying Atlas
Arteria’s sources of cash flow.
2022
JUNE APRR network expanded with
ownership of A79 finalised.
SEPTEMBER Acquisition of a 66.67%
majority interest in Chicago Skyway
announced, doubling Atlas Arteria’s
weighted average concession life, and
providing for long-term sustainable
distributions. An equity raising for $3.1bn
was undertaken to fund the transaction.
NOVEMBER Tolling commenced on the A79
in France.
2023
JANUARY APRR and AREA awarded
a €410m capital investment plan
(Investment Plan) by the French
Government, compensated through
a number of measures including
supplemental toll increases.
CORPORATE
APRR
WARNOW TUNNEL
CHICAGO SKYWAY
DULLES GREENWAY
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 2022 | 9
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS STRATEGIC FRAMEWORK
Atlas Arteria’s strategy is to leverage our strengths to improve
cash flows from each of our businesses to grow value for all
our stakeholders.
Against the backdrop of an evolving external environment, our strategic framework has remained relatively constant
since internalisation in 2018. Our strategic initiatives are designed to address what is most important to the business
and its stakeholders.
Information on how we work with our key stakeholders is provided on pages 26 and 27.
STRATEGIC THEME
Initiatives
Progress
Reduce legacy
complexity and
optimise the
value of what
we own
Active
operational
management
to improve
earnings
and value
Growth of the
APRR business
In 2022 Atlas Arteria successfully worked alongside Eiffage to grow the APRR business
while simultaneously delivering on the French Government’s infrastructure agenda.
– In June, the ownership of the A79 was finalised, and tolling commenced in November.
– In January 2023, a €410 million capital investment plan (Investment Plan) was signed
by APRR and AREA, under which a series of capital projects will be undertaken and
compensated through a number of measures including supplemental toll increases.
Working on
price path
certainty for
the Dulles
Greenway
People
ESG and
environmental
performance
After three years of political and stakeholder engagement, legislation will be considered
by the Virginia General Assembly in February 2023 which would authorise the Virginia
Department of Transportation to negotiate the potential implementation of distance-based
tolling. This would present an opportunity for the Dulles Greenway to:
– deliver more equitable tolls to its users;
– improve overall network utilisation in the area;
– restructure debt to create a long-term sustainable balance sheet that allows distributions; and
– move regulation of the concession from the Highway Corporations Act (HCA), to the legislation
regulating all other Virginia concessions, the Public Private Transportation Act (PPTA).
Developed the Executive Team, with David Collins joining as CFO and Catherine Brain
promoted to the role of Group Executive, People and Culture.
Continued to build out capabilities within the management team, including at our European and
US offices. Our appointments in the US have been critical in delivering our acquisition of the
Chicago Skyway, and they will continue to be critical to its operation as we seek to implement
our business plans and pursue value-adding initiatives within the business.
Additionally, our acquisition of the Chicago Skyway enhances our breadth of operational
experience via its strong local management team, which has a significant track record of
success managing transportation assets.
Investment in the development of the Atlas Arteria team has focused largely on leadership,
team effectiveness and technical expertise. We continue to maintain lower head-office costs
than would otherwise have been paid to Macquarie.
We have maintained our target of a 40% gender balance at Board level, within senior
management1 and the corporate team.
Continued to deliver initiatives against our four priority areas of safety; customers and
community; our people; and environmental stewardship. These are underpinned by a set
of metrics and actions to support achievement of our targets.
Good progress was made in 2022 in aligning Atlas Arteria with the Taskforce on Climate-
related Financial Disclosure (TCFD) recommendations. A summary of our progress is included
on pages 24 and 25 of this report.
Atlas Arteria continued to focus on its greenhouse gas emissions profile and facilitating a
reduced customer footprint. Progress this year includes:
– roll-out of electric vehicle charging stations across the APRR and AREA network, with 100%
of motorway service areas now equipped with high or very-high power terminals; and
– a tolling regime to incentivise very low emission vehicles travelling on the A79.
Atlas Arteria continued to perform strongly against key sustainability benchmarks:
– Atlas Arteria ranked 11th out of 175 peers for ESG performance by Sustainalytics;
– Atlas Arteria also achieved an A rating in GRESB’s Infrastructure Public Disclosure
assessment with a score of 80, up from a B (63) in 2021; and
– APRR maintained its score of 87 in GRESB’s Infrastructure Asset assessment.
Our progress in this area will be outlined in a separate Sustainability Report to be released
in April. A summary is provided on pages 22 to 27 of this report.
1. Includes Executive Team, direct reports to Executive Team members in senior roles and CEOs of wholly and majority-owned businesses.
10 | ATLAS ARTERIA ANNUAL REPORT 2022
O
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STRATEGIC THEME
Initiatives
Progress
Active
operational
management
to improve
earnings and
value continued
Safety
Customers
Transition
of Chicago
Skyway
Technology
Disciplined
capital
management to
underpin strong
and sustainable
distributions to
securityholders
Sustainable
distributions
funded from
operating
business
cash flows
Appropriate
gearing across
our businesses
In line with our safety-first culture, we implemented further initiatives to minimise dangerous driver
behaviour on our roads.
APRR recorded a LTIFR of 3.67, a result above its target to keep LTIFR ≤3.0, driven by an increase in
accidents in the busy summer and Christmas periods. Zero lost-time injuries were recorded at Dulles
Greenway, Warnow Tunnel and in the corporate team. We continue to focus on embedding a safety
culture and implementing innovations that reduce the risk to our people on motorways.
We undertook in-depth analysis of underlying traffic trends and conducted customer surveys to
understand how customers can be better served through the operational management of Atlas Arteria
road networks (for example the implementation of improved signage and toll payment options).
Our acquisition due diligence identified opportunities to leverage our operational and asset
management capabilities to improve the performance of the business and add value, including:
– implementation of a whole-of-life approach to asset management;
– modernising operations through technology and automation;
– optimisation of capital structure; and
– enhancing ESG approach and performance.
We will work with our fellow shareholder, Ontario Teachers’, during 2023 and beyond to implement
these enhancements.
During 2022 Atlas Arteria focused on the use of innovative technology to assist in better decision making
in the capital expenditure process through specialised tools such as laser scans of key infrastructure.
Technology has also made our operations: more efficient, through the use of operational software; and
safer, by developing a prototype robotic arm for trucks that place cones and signs, which can remove the
need for on-the-ground workers at road closures. APRR is collaborating on European research projects
such as the InDID project to progress the potential for automated cars on our roads in the future.
Atlas Arteria guided to a record distribution for 2022 of 40 cents per security, reflecting the
strong performance of both APRR and Warnow Tunnel. The H2 2022 distribution is expected to be
supported by available excess cash held on balance sheet.
The acquisition of the majority interest in the Chicago Skyway will support distributions to
securityholders over the long term.
Chicago Skyway’s diversified user mix, demonstrable value for customers and favourable embedded
tolling escalation is expected to deliver growing operating cash flows.
Continued focus on appropriate gearing across our businesses:
– strong credit rating at APRR with A rating by Fitch Ratings and A- rating by S&P;
– Warnow Tunnel capital restructure completed to investment grade metrics in 2021;
– Chicago Skyway conservatively geared (BBB+) with a long-dated weighted average debt maturity
profile (considerable debt capacity remains which can be utilised for capital releases over time as
earnings are delivered); and
– seeking to reinstate an investment grade capital restructure at Dulles Greenway.
Funding to
support growth
initiatives
Atlas Arteria retains balance sheet optionality via under-utilised leverage capacity at the corporate
level, at APRR and the Chicago Skyway.
The Groups retain the capacity to reinstate covenant-light holding company debt at the right time,
for the right opportunity (for example the restructuring of the Dulles Greenway).
Lengthen
average
concession life
Acquisition
of majority
interest in
Chicago
Skyway
Atlas Arteria’s acquisition of Chicago Skyway doubles our average concession life from 18 years to
37 years on a weighted equity value basis, underpinning long-term value and cash flows for
securityholders. At the time of acquisition, Chicago Skyway’s 81-year remaining concession was the
third longest remaining concession length in the US.
This material extension of Atlas Arteria’s average concession life provides a platform for growth and
will enhance our ability to compete in any future APRR and AREA re-tendering process, as well as other
concession lengthening growth transactions.
Pursuing
organic growth
opportunities
at APRR
In 2022 APRR finalised the ownership of A79, which has a concession expiry in February 2068
(versus APRR which expires in November 2035).
We continue to bid for new concessions in France, which are progressively coming to market,
including the A412 which is currently in the tender phase.
We continue to work with various levels of the French Government on achieving their road
development and ESG objectives in return for potential concession extensions.
Diversify and
manage risk
Further
develop risk
management
We continue to embed the risk management framework across Atlas Arteria and its businesses,
to build a culture of risk awareness and a consistent understanding of current and emerging risks.
This promotes risk-based decision making that is consistent with our risk appetite.
This year the risk management framework has been utilised in the Chicago Skyway acquisition and the
identification and assessment of our climate change risks, to align to the Taskforce on Climate-related
Financial Disclosure (TCFD) recommendations.
Diversification
of cash flow
The acquisition of the majority interest in Chicago Skyway delivers financial, geographical, currency
and distributions diversification to Atlas Arteria’s business.
We continued work to unlock the distribution capability at Dulles Greenway for the benefit
of securityholders.
ATLAS ARTERIA ANNUAL REPORT 2022 | 11
APRR AND ADELAC
FRANCE
APRR Group is a 2,406 kilometre motorway network in the east and
south-east of France, including ADELAC’s 20 kilometres. It is the second-
largest motorway network in France and the fourth-largest in Europe.
Atlas Arteria interest
in APRR Group
31.14%
31.17%
in ADELAC
CONCESSION TERM
APRR: 2035
AREA: 2036
ADELAC: 2060
A79: 2068
12 | ATLAS ARTERIA ANNUAL REPORT 2022
Paris
Orléans
Troyes
Toul
Stuttgart
Germany
Mulhouse
Cosne-Cours-sur-Loire
Dijon
Bourges
France
Besançon
Zurich
Switzerland
Vichy
Geneva
Clermont-Ferrand
Lyon
Bordeaux
Valence
APRR
AREA/ADELAC
A79
Chambéry
Grenoble
Milan
Italy
APRR (including AREA & A79)
Traffic: up 8.2% on pcp
Toll revenue: up 8.8% on pcp
EBITDA: up 10.1% on pcp
ADELAC
Traffic: up 21.4% on pcp
Toll revenue: up 27.9% on pcp
EBITDA: up 25.1% on pcp
The APRR Group owns and controls three separate concessions:
the APRR concession, the A79 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.
It provides essential connectivity between Paris and Lyon,
France’s two largest metropolitan areas.
Year in review
The business delivered robust results, driven by continued
strong demand for the network and toll increases implemented
in February 2022 on the APRR and AREA motorway networks
(by 2.05% and 2.06% respectively). APRR and AREA are positively
leveraged to inflation with further toll increases implemented
on 1 February 2023 (by 4.68% and 4.69% respectively 1).
APRR’s investment in this vital business continued with
the approval of its fourth Investment Plan by the French
Government since privatisation.
Tolling commenced on the A79 in November, which will generate
long-term value for securityholders.
Traffic
Traffic has returned to pre-COVID levels and the business
continued its positive trajectory of post-pandemic recovery.
Traffic levels were driven by continued strong leisure demand
and international trade. The seasonal strength of the business
was evident with bumper winter and summer leisure seasons.
Summer traffic delivered the second highest quarterly result
on record. This was exceeded only by the third quarter of 2021
when levels were at unprecedented high volumes following the
relaxation of movement restrictions. Heavy vehicle traffic also
continued to grow with international trade. The APRR network
represents a critical part of Trans-European trade routes and,
as such, heavy traffic grew by 2.4% above 2021 and 3.0% above
2019 levels.
The year’s traffic results were delivered against the backdrop
of higher retail fuel prices in France and some union action
and strikes at refineries later in the year, which reduced the
availability of fuel in France. Despite this, demand for the network
remained high, demonstrating its resilience.
Overall, APRR Group delivered an impressive result for 2022,
with traffic, revenue and EBITDA exceeding pre-COVID levels,
demonstrating the strength, value and resiliency of this business.
Continued investment in the network for an improved
customer experience
Around €400 million was invested in capital projects during
the year, including those previously agreed with the French
Government under the 2014-2018 Management Contract,
the 2015 Stimulus Package and the 2018 New Motorway
Investment Plan.
In October, construction was completed on the 88km section
of the A79, with tolling commencing on 4 November 2022.
The A79 forms part of a key east-west transversal link from
Royan on the Atlantic Coast to the Rhône Valley and beyond
towards Germany, Switzerland and Italy. This concession is
the first in France to be commissioned with free-flow tolling
technology from the outset, eliminating manual payment and
delivering a smoother flow of traffic and emission reductions
(see case study). This expansion has vastly improved the safety
conditions on the road, creating two lanes on each side, while
simultaneously delivering traveller time savings.
APRR Group ownership of the A79 is now at 99.9%, with the
ownership structure being finalised on 30 June 2022, at a cost
of €658.9 million. The remaining project cost of €100.7 million
was spent during the second half of 2022.
In December 2022, the works on the A480 were completed,
with a total capital investment of €340 million. At more than
half-a-century old (having been constructed for the 1968
Olympic Games) the A480 was not equipped to safely handle
the more than 100,000 vehicles per day that use it. The
motorway is vital for Grenoble, as its mobility backbone,
connecting the urban area from north to south. The
redevelopment of the Rondeau interchange and the A480
will significantly improve safety conditions, relieve congestion
and allow other forms of travel, such as cycling.
Another important investment is in the A43-A41 Chambéry
Junction which connects Annecy with Grenoble. This is a
€95 million capital project which will improve traffic flow and
safety and support carpooling. Construction commenced in
March 2019 and is expected to complete in the first half of 2023.
1. APRR awarded 4.74% and AREA awarded 4.77%, however APRR and AREA decided that the supplemental toll increase in 2023 of 0.06% and 0.08% would exceptionally
not be applied in 2023.
ATLAS ARTERIA ANNUAL REPORT 2022 | 13
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS APRR AND ADELAC
FRANCE
Greener outcomes for a more sustainable future
APRR Group continues to work with the French Government
on its ambitious environmental agenda to improve outcomes
for all stakeholders.
With road transport accounting for around 15% of global
emissions, Atlas Arteria remains focused on making a positive
impact across its global network. APRR Group’s charging point
deployment plan (established in 2012) supports the increasing
move to electric vehicles. In 2022, APRR Group met its target
of equipping 100% of its 98 service areas on the APRR and AREA
network with electric vehicle charging terminals, delivering
683 charging points (of which 591 are very high power) across
99 charging stations. APRR Group also introduced 98 electric/
hybrid light vehicles and 83 charging stations to its internal
operations in 2022, taking the total number of electric light
vehicles to 142 and the total number of internal charging stations
to 132. This means that 14% of APRR Group’s light vehicles have
now been converted to electric.
To encourage more travellers to carpool, 16 carpooling car parks
were built on the APRR/AREA network in 2022, with a total
114 carpooling car parks now available on the network.
Travellers can securely park their vehicles in the car parks
and travel from there in a carpool arrangement.
APRR Group also maintained its GRESB Infrastructure Asset
Assessment score at 87 this year and remains committed to
making progress in this area.
An award-winning culture
APRR Group’s commitment to building a culture that is diverse,
inclusive and where employees feel valued, was recognised
again this year.
For the eighth consecutive year, APRR Group was named
France’s Best Employer in its sector by Capital magazine.
In 2022, APRR signed a charter of commitment (l’Autre Cercle
/Other Circle charter) to the inclusion of LGBT+ people in
the workplace.
Finalised Investment Plan set to deliver long-term
value, including significant environmental benefits
On 31 January 2023, APRR and AREA signed a €410 million
capital investment plan (Investment Plan) with the French
Government, which is set to generate long-term value.
The signed agreement is the result of negotiations with the
French State which commenced in September 2021. This speaks
to the business’s ability to build strong relationships and its
preparedness to work on mutually beneficial solutions.
The agreement includes supplemental toll increases for APRR
and AREA between 2023 and 2026. Under the agreement, APRR
and AREA’s capital commitment will be spent on motorway
upgrades, environmental protection and safety developments,
as well as customer service improvements.
14 | ATLAS ARTERIA ANNUAL REPORT 2022
Financial strength to fund growth opportunities
APRR Group remains in a strong financial position with
€3.5 billion of liquidity comprising a €2.0 billion undrawn
revolving credit facility and €1.5 billion cash at the end
of December 2022. This balance sheet capacity allows
APRR Group to fund opportunities on the network,
including those in the newly finalised Investment Plan.
In May, APRR Group successfully priced €500 million of bonds
under its Euro Medium Term Note Program, providing additional
liquidity and extending its weighted average debt maturity.
As a reflection of this strong financial position, in November,
Fitch Ratings upgraded APRR Group’s credit rating from ‘A-’
to ‘A’ (long-term issuer default rating) and from ‘F1’ to ‘F1+’
(short-term issuer default rating). The ratings outlook for
APRR is ‘Stable’.
Adding future value
Commitment to investment in this business remains steadfast,
and the outlook for APRR Group is positive. It is well positioned
to continue to generate value into the future with a strong
pipeline of projects, both recently completed and due for
completion in the coming years.
Total capital investment for the next five years is expected
to be approximately €350 million–€400 million and on
average approximately €250 million per annum thereafter
(excluding any future investment plans agreed with the
French Government). This updated guidance includes the
newly agreed Investment Plan.
The business’s strong relationship with the French Government
continues. APRR will continue its dialogue with the French
Government on achieving their road development and ESG
objectives in return for concession extensions.
A number of toll road concessions in France are nearing their
end. With the additional scale that Atlas Arteria has created
through its acquisition of the majority interest in the Chicago
Skyway, we are well positioned to participate in any potential
re-tendering.
“ The new ramp to the A41 towards Annecy already
allows me to save time for my journey. From now on,
I no longer need to stop to take a ticket; you don’t even
have to slow down. It also makes traffic more fluid and
there is no waiting to access the A41. In addition, I can
more easily pick up speed to get on the highway: I find
it safer! Since there is no more stopping and restarting,
I also consume a little less fuel.”
Romain, bank agent
Case study
Free-flow motorway to deliver
greenhouse gas emission reductions
The A79, which commenced tolling in November, is the
first in France to be commissioned with free-flow tolling
technology from the outset. This means travellers do not
have to stop to make payment. Instead, their vehicle is
identified by its electronic toll badge or licence plate. This
results in streamlined traffic, time savings and substantial,
ongoing reductions in greenhouse gas emissions
by eliminating vehicles slowing down, standing and
accelerating at toll plazas.
In 2022, on the A43 (Lyon/Grenoble/Chambéry) and
A79 (Montmarault/Digoin), ticketless entry points were
installed, and the feedback from travellers has been
very positive. As part of the new Investment Plan, the
majority of the AREA network entry points will also be
switched to free-flow tolling. Atlas Arteria looks forward to
working with the French Government as it considers more
widespread application of free-flow tolling on the APRR
Group network.
ATLAS ARTERIA ANNUAL REPORT 2022 | 15
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR 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.
Atlas Arteria interest
100%
Warnemünde
Warnow Tunnel
Rostock
Hamburg
Berlin
CONCESSION EXPIRY: 2053
Traffic: up 3.4% on pcp
Toll revenue: up 5.2% on pcp
EBITDA: up 5.6% on pcp
16 | ATLAS ARTERIA ANNUAL REPORT 2022
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
travelling along 19 kilometres of untolled roads through
the shopping precinct of Rostock or using the ferry to cross
the river. This alternate route often suffers from congestion
during peak periods.
Year in review
The Warnow Tunnel had a productive year, making good
progress implementing a range of initiatives to improve safety
and the customer experience. The business continues its
trajectory of recovery post COVID-19. This is despite traffic
being impacted early in the year by pandemic restrictions and
over the European summer by the introduction of the German
Government’s temporary public transport card. The Warnow
Tunnel is another Atlas Arteria business that is positively
leveraged to high inflation. As a result, toll prices were increased
by an average of 6.4% in November 2022.
Traffic
Tightened COVID-19 restrictions in response to the Omicron
outbreak (in late 2021 and the first quarter of 2022) impacted
mobility and traffic. By the end of April, restrictions were largely
lifted, which led to an increase in tourism and corresponding
employment in Mecklenburg-Vorpommern to above pre-COVID
levels. This assisted Warnow Tunnel’s post-COVID recovery,
however, summer traffic was negatively impacted by the
introduction of the German Government’s temporary public
transport pass. The pass was available from June to August
and provided unlimited use of local and regional public transport
for €9 per month.
As a medieval city with ageing infrastructure, roadworks in
Rostock are a recurring reality. When these take place on
competing routes, it can significantly increase Warnow Tunnel’s
traffic levels because of the considerable commuter time
savings the tunnel delivers. In the fourth quarter, roadworks on
Am Strande, a section of Warnow Tunnel’s competing route, led
to an uplift in traffic performance over October and November.
Overall, traffic at Warnow Tunnel was up by 3.4% and toll
revenue and EBITDA up 5.2% and 5.6% respectively on 2021.
Customer improvements a continued priority
The business delivered progress on its commitments to improve
the customer experience during the year.
Clearer overhead lane signage at the toll plaza was installed
(see case study), along with additional credit card terminals,
which are now present in over 50% of lanes. Additional OSCARD
customer card readers were also installed in all manual lanes.
This simplifies the payment and top-up process on customer
cards. These convenient, contactless payment options save
customers valuable time at the toll plaza.
During 2022, Warnow Tunnel commenced preparation for the
installation of advanced cameras for licence plate recognition.
Once these cameras are installed, they will provide an
alternative to the existing technology for identifying customers
and vehicles.
In August 2022, the Warnow Tunnel app was also launched,
making it easier for customers to make account changes and
top-ups, access trip reports and the latest traffic information.
Investing in the Warnow Tunnel
Atlas Arteria’s approach to safety follows international best
practice. Accordingly, Warnow Tunnel achieved another ISO
certification during the year, gaining its ISO 45001 (health and
safety certification) in December. This standard helps to reduce
and mitigate health and safety risks and aims to integrate
occupational health and safety into company structures in a
consistent and sustainable manner.
Routine annual tunnel maintenance undertaken in
September 2022 found all systems functioning well and all
technical equipment in good condition. In December 2022,
tunnel jet fans were upgraded in the north tube to improve
the tunnel ventilation.
Adding future value
As part of the business’s ongoing commitment to reduce
energy use, Warnow Tunnel has committed to upgrading
to LED lighting on the tunnel’s access roads and is studying
an optimised approach inside the tunnel. As well as reducing
energy consumption, LED lighting will reduce business costs
for electricity and maintenance.
The continued rollout of more credit card terminals in the first
half of 2023 will ensure all payment methods are available in
each lane at the toll plaza (excluding the bidirectional lane).
This will improve the experience for customers, particularly
those travelling from abroad, who often use a credit card
for payment.
Case study
Increasing safety by addressing
dangerous driving
Warnow Tunnel is one of only two toll roads in
Germany for light vehicles. This means that many
customers are unfamiliar with the process of having
to make lane choices for payment at toll plazas. In light
of this, the business undertook a customer behaviour
study to improve the customer driving behaviour at
Warnow Tunnel and to understand how to improve
the customer experience.
One of the outcomes was the installation of clearer
signage, which was installed in February 2022.
This new signage aims to prevent last-minute lane
changing, reversing or passengers exiting their
vehicles. The new LED technology also enables clear
visibility of available payment methods in each lane by
providing good visibility under all weather conditions.
ATLAS ARTERIA ANNUAL REPORT 2022 | 17
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS
CHICAGO SKYWAY
Chicago, USA
The Chicago Skyway is a 12.5 kilometre elevated toll road providing
congestion relief and an essential transport link between Northwest
Indiana and Chicago (the third-largest metropolitan area in the US).
Atlas Arteria interest
66.67%
O’Hare
International
Chicago
Chicago Midway
International
Lake Michigan
Dan Ryan
Expressway
Chicago Skyway
Port of Chicago
Illinois
Bishop Ford
Expressway
West Point Toll Plaza
Gary/Chicago
International
Kingery
Expressway
Indiana Toll Road
Borman
Expressway
Indiana
CONCESSION EXPIRY: 2104
Traffic: up 2.2% on pcp
Toll revenue: up 5.1% on pcp
EBITDA: up 4.8% on pcp
18 | ATLAS ARTERIA ANNUAL REPORT 2022
This acquisition delivers on Atlas Arteria’s strategy and creates
a platform for a sustainable future. The addition of Chicago
Skyway diversifies and strengthens Atlas Arteria’s business,
balancing exposure by geography and currency. The acquisition
doubles the business’s weighted average concession life,
increases its scale and greatly enhances its ability to provide
long-term sustainable distributions for securityholders for
decades to come.
A transformative acquisition set to create a platform
for a sustainable future
In December 2022, Atlas Arteria completed its acquisition of
a 66.67% majority interest in the Chicago Skyway, representing
an equity value of US$2,013 million.
The acquisition costs were funded through new equity, via a
fully underwritten 1 for 1.95 accelerated non-renounceable
entitlement offer, which raised A$3,098 million.
Ontario Teachers’ Pension Plan (Ontario Teachers’) retained
a 33.33% interest in the Chicago Skyway. Atlas Arteria has
an established relationship with this high-quality investment
partner, which is one of the world’s leading infrastructure
investors. Atlas Arteria will continue to build on this valuable
partnership to successfully manage and operate this business.
Atlas Arteria’s deep, historical understanding of the business
from prior ownership gives it unique and advantageous insights
along with confidence in its expected returns.
Business summary
Chicago Skyway is an essential toll road with more than
60 years’ operating history. The 12.5 kilometre elevated road
provides congestion relief in the third-largest metropolitan
area of the United States.
The Chicago Skyway is situated in one of the densest urban
areas and a key infrastructure hub in the Midwest, delivering
a diverse range of commuter, leisure and commercial traffic.
The Chicago Skyway provides customers reliable and substantial
time savings of up to 30 minutes1 and distance savings of around
nine kilometres.
The road was initially opened to traffic in 1958 and, following
privatisation by the City of Chicago in 2005, is now operated
under a 99-year concession lease, with 81 years remaining.
A diverse user base and steady, inelastic traffic
Chicago Skyway has a diverse user base of commuter, leisure
and commercial freight traffic. The road has relatively limited
reliance on peak hour commuters and supports a significant
flow of commercial freight traffic due to the fast, reliable, less
congested route it provides. It is the most direct route between
Northwest Indiana and Chicago, with the other highly congested
alternatives holding limited appeal to travellers.
The Chicago Skyway has a large proportion of leisure traffic
which includes travel between Chicago and the beach resorts
on the eastern shore of Lake Michigan. The summer months
of June to August historically feature higher traffic volumes.
Commercial freight traffic is underpinned by the region’s
position as a logistics hub, with an extensive freight system
across rail, airports and trucking. This significant stream of
heavy vehicle traffic ensures a relatively robust level of baseline
traffic throughout the year.
The diverse user base makes the Chicago Skyway resilient to
shifts in commuting patterns. This was exhibited with its traffic
resilience in the face of economic challenges, particularly
throughout the COVID-19 pandemic.
1. c. 20 minutes on average.
A highly attractive toll regime
The Chicago Skyway’s concession agreement offers an attractive
tolling regime, which allows tolls to escalate at the greater
of US CPI, or US nominal GDP per capita, with a 2.0% floor.
This guarantees toll increases of at least 2.0% should CPI
or GDP be lower.
Tolls are increased on a two-year look-back basis, which
provides escalation predictability. In 2022, tolls were increased
by 2.0% based on 2020 variables, which reflected impacts of the
COVID-19 pandemic. In 2023, tolls were increased by 10.9%.
This concession agreement, allowing for tolls to escalate
automatically without the need for government approval,
provides long-term, sustainable value for Atlas Arteria
and its securityholders.
Operational and maintenance approach
From an operational perspective, Atlas Arteria will bring a
proactive, whole-of-life approach to asset management at the
Chicago Skyway. This approach to maintenance will support
the right balance between necessary investments in the short
and medium term in order to maintain the long-term condition
of the asset, and over time, to reduce overall maintenance
requirements. Maintenance capital expenditure is expected to
be slightly higher than the historical average of US$11 million
over the medium term, before reverting from 2032 in line with
historical performance. No major rehabilitation is expected on
the Chicago Skyway until around 2050.
Atlas Arteria will also leverage its expertise to modernise the
business through technology and automation.
An aligned focus on sustainability
The Chicago Skyway’s sustainability priorities are aligned with
Atlas Arteria’s, and we look forward to working with the team to
further mature their approach. Both businesses are committed
to building long-term sustainable outcomes for the benefit of
all stakeholders and in the interests of supporting sustainable
equity distributions over the long term.
There will be an immediate and continued focus on integrating
the business into Atlas Arteria’s sustainability agenda across
the four key priority areas of safety, our people, customers and
community and environmental stewardship. Atlas Arteria will
continue to build a diverse and inclusive culture at the Chicago
Skyway, which at the time of acquisition had a workforce
comprising 56% women, 78% from minority backgrounds and
53% over the age of 40. It will also continue to build respectful,
long-term relationships with customers, local community groups
and their representatives.
A smooth transition and strong
stakeholder relationships
There is a strong local management team on the ground at the
Chicago Skyway with a successful track record. Atlas Arteria has
already begun to work alongside the team as we leverage our
capabilities as a global operator of toll roads.
Immediate priorities to ensure a smooth transition include
supporting transparent and sustainable decision making with
investment partner Ontario Teachers’. In particular, we are
focused on the shift to a more proactive asset management
approach. We are already working with the Chicago Skyway
management team and Ontario Teachers' to agree the strategy
and plans that will improve asset condition management and
reduce overall maintenance requirements over time.
In addition, Atlas Arteria will continue to engage and collaborate
with Ontario Teachers’ to complete upcoming financing activities.
ATLAS ARTERIA ANNUAL REPORT 2022 | 19
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS DULLES GREENWAY
Virginia, USA
The Dulles Greenway is a 22 kilometre toll road in Northern Virginia
in the USA. It offers customers a cost-effective way to travel between
Northern Virginia and the greater Washington area.
Atlas Arteria economic interest
100%
Leesburg
Dulles
Greenway
Loudoun
County
Dulles
International
Airport
Tysons Corner
Rockville
Bethesda
Falls
Church
Maryland
Silver
Spring
Washington DC
Arlington
Reagan
National
Airport
Fairfax
Virginia
CERTIFICATE OF AUTHORITY EXPIRY: 2056
Traffic: up 6.6% on pcp
Toll revenue: up 12.0% on pcp
EBITDA: up 16.5% on pcp
20 | ATLAS ARTERIA ANNUAL REPORT 2022
Located in one of the fastest growing and more affluent counties
in the United States, the Dulles Greenway provides customers
with a reliable and safe connection from Leesburg, Virginia,
through Loudoun County to Dulles International Airport and
connector roads to Washington DC. For over 25 years, the
Dulles Greenway has kept people connected to their jobs,
communities, recreational venues, and to their families.
It provides a safe, predictable and faster transport option.
Year in review
Dulles Greenway continues to show steady, yet promising, signs
of recovery from the impacts of COVID-19. On 1 January 2022, off-
peak toll prices increased by 5% in line with the State Corporation
Commission (SCC) rate case outcome in 2021. The business
continues to build a strong relationship with the Virginian
Administration to achieve positive outcomes for all stakeholders.
Legislation to be considered in February 2023
In February 2023, legislation will be considered by the Virginia
General Assembly which would authorise the Department of
Transportation to negotiate and execute a new concession
agreement with the Dulles Greenway. It also means that from
signature of such a concession agreement, Dulles Greenway
would operate under the authority and requirements provided
by the Public-Private Transportation Act (PPTA) and would cease
to operate under the Highway Corporation Act.
Should the legislation not pass at this time, Atlas Arteria will
continue to engage in discussions with the Administration and
legislators on the opportunity, as a move to distance-based
tolling makes sense for all parties. The community has certainly
vocalised its support for this model via community outreach and
engagement with key industry bodies. Should the legislation not
be passed, Dulles Greenway will advance a rate case application
with the Virginia State Corporation Commission for increased
tolls per our existing rights under the Highway Corporation Act.
Traffic
Overall, return to work traffic has been more gradual than
expected, with people continuing to work from home. Heavy
snowfall early in the year also prevented road travel, along with
the Omicron COVID-19 variant, which kept white collar workers
working from home.
By March, however, traffic was showing promising signs of
improvement. A return to office mandate for Virginia and District
of Columbia State Government employees assisted mobility
levels, however, it was issued just ahead of the summer holiday
period, so did not translate to immediate increases in work
commuter traffic. Despite this, third quarter traffic continued
to track above 2021 levels, at 1.5% higher than the prior
corresponding period. Towards the end of 2022, there were
more encouraging signs of improvement with the total number
of trips in the fourth quarter the highest since the beginning
of the COVID-19 pandemic.
Overall, due to these challenging conditions, traffic at Dulles
Greenway remained below 2019 levels, however, compared
with 2021, traffic was up by 6.6% and toll revenue and EBITDA
were up 12.0% and 16.5% respectively.
Customer satisfaction survey
In May, Dulles Greenway conducted its first Customer Satisfaction
Survey to understand travellers’ opinions and attitudes of Dulles
Greenway. The response rate was strong, with a completion rate
of over 85% and a total of 339 participants.
Participants were overwhelmingly satisfied (91%) with the
overall experience of driving on the Dulles Greenway; a positive
reflection of the three capital improvement projects completed
over the last two years. When it came to road conditions, safety
and travel time, more than 94% of participants were satisfied.
Survey results also showed strong support for a distance-based
pricing model, with 86% of participants supporting a move to
that model.
Strong community engagement
Dulles Greenway continued to build strong community links
and engagement during the year.
Its ‘Eagle Camera’ partnership with the Loudoun Wildlife
Conservancy and the American Eagle Foundation celebrated its
first anniversary in 2022. The cameras livestream an ‘eagle-eye’
view into the nest of two American bald eagles who call the
Dulles Greenway Wetlands home, even capturing the birth of
their first eaglet. A naming competition between Loudoun County
Public Schools saw the two adult eagles named Rosa and Martin
(in honour of civil rights leaders Rosa Parks and Martin Luther
King Jr) and the eaglet, Orion. The initiative is a testimony of
Dulles Greenway’s commitment to the community. It will raise
community and broader awareness of the wetlands and their
precious wildlife.
The second annual Run the Greenway event also took place
in May 2022, raising an impressive US$220,000 for 22 local
non-profits (see case study).
Reinforcing financial stability
Dulles Greenway remains well placed from a liquidity
perspective, with US$207.6 million of cash on the balance sheet
at 31 December 2022. Due to Dulles Greenway not passing its
one and three-year lock-up tests, US$62.5 million remained in
cash reserves that would otherwise have been available for
distribution to Atlas Arteria.
Adding future value
A new violation enforcement system will be introduced in 2023
which is expected to remove the need for in-person customer
assistance in the lanes, improving safety outcomes and efficiency.
Case study
Serious runs on the board
for local charities
The second Run the Greenway event, held in May
2022 in Northern Virginia, was highly successful
in terms of participation and the amount of money
raised for local charities.
The event is inclusive, comprising a five and
10 kilometre run, as well as an 800 metre Kids’ Fun
Run along the Greenway. It allows participants to raise
funds for charities and to experience the motorway
from a completely different perspective.
More than 1,700 people took part, raising around
US$220,000 for 22 local non-profits. Dulles Greenway
also donated US$50,000 to the various charities in
support of the chosen charities of race winners.
ATLAS ARTERIA ANNUAL REPORT 2022 | 21
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS
SUSTAINABILITY
At Atlas Arteria, we are committed to playing a positive role
in society and creating long-term value for our stakeholders.
From the strong and sustainable outcomes we create for
investors and customers, through to our employees and
communities, we take our responsibilities seriously. Embedding
sustainable business practices is core to our growth and plays
a crucial part in how we define success.
SUSTAINABILITY PRIORITIES
Safety
Whether working or
travelling with us, safety is
our primary focus, and we
pursue a zero-harm culture.
Customers
and community
We provide positive customer
experiences, contribute to
our communities and provide
safer, faster transport options
that make life easier.
Our
people
We promote inclusive work
environments, fostering an
engaged, collaborative and
diverse workforce towards
business success.
Environmental
stewardship
We actively manage our
environmental impacts,
provide solutions that enable
customers to minimise their
footprint, and contribute to
a low-carbon future.
BUSINESS FUNDAMENTALS
Governance
We are accountable
and transparent in all
our business dealings.
Ethics, values
and culture
We act ethically and promote
a culture founded on our fi ve
values: Safety, Transparency,
Engagement, Environment
and Respect.
Sustainable
growth
We focus on growing our
business and returns for the
long term while delivering
positive social benefi t.
Innovation
and technology
We monitor innovations and
technology and proactively
respond to changing needs
and expectations.
Implemented through policies and programs. Monitored through metrics and targets.
Key targets
LTIFR ≤3 at large businesses
and LTI ≤1 at small businesses.
Maintain our 40% commitment to gender
diversity and evolve representation across
and within specific teams.
25% reduction in scope 1 and 2 emissions
by 2025, and 46% by 2030, compared
to a 2019 baseline.
22 | ATLAS ARTERIA ANNUAL REPORT 2022
Here at Atlas Arteria, we define success not just by achieving
excellent results but by how we have worked to achieve them: the
long-term, sustainable outcomes we have created along the way.
Our Sustainability Priorities cover four key areas that present
the greatest environmental, social and governance (ESG)
opportunities and risks for our business and those of greatest
importance to our stakeholders. This section provides a
summary of our key initiatives across these four areas.
More detailed information will be provided in the Sustainability
Report released in April 2023.
Of particular note, this year we delivered year one of our three-
year Taskforce on Climate-related Financial Disclosures (TCFD)
roadmap, developed in response to the gap analysis undertaken
in 2021. This work represents a significant step forward in
aligning our climate actions and reporting to the TCFD. We
provide first insights on our approach on pages 24 and 25,
with further detail to follow in the Sustainability Report.
Heading into 2023, ensuring alignment of our newly acquired
business Chicago Skyway with our sustainability strategy is a
key focus.
Safety
Safety is our top priority. We have a safety-first culture,
empowering our people with the right equipment and the right
training to do their job safely, and maintain safe roads across
our networks. Nothing is more important than our people and
customers returning home safely at the end of each day.
We are pleased to report no lost-time injuries at Dulles
Greenway, Warnow Tunnel or in the corporate team. At
APRR, we are disappointed to have missed our target to keep
LTIFR ≤3, delivering an LTIFR of 3.67. This was driven by an
increase in accidents in the summer and Christmas periods.
APRR is committed to improving on this, and APRR’s COO
has subsequently visited with district managers to further
investigate and reinforce the safety culture.
We are deeply saddened by an accident that occurred in April,
when three APRR employees were struck by a van. Tragically,
it resulted in one fatality and a serious injury. Support has been
provided to the employees’ families and to APRR teams as they
navigate the impacts of this tragedy. We have actively worked to
understand the cause, identify learnings and share these across
our businesses. This event underscores the inherent safety
risks in our business and strengthens our resolve to effectively
manage them.
We continued to strengthen our safety systems, undertaking
safety audits and rolling out Asset Vision, a safety reporting
software, to all sites. Warnow Tunnel, also achieved ISO 45001
certification (health and safety) in December 2022 (see page 17).
For customers, we have worked to address dangerous driving:
installing improved LED signage at Warnow Tunnel (see case
study on page 17) and running a ‘Move forward not backwards’
campaign at Dulles Greenway to discourage reversing at the
toll plaza. Meanwhile, APRR’s upgrade of the A79 to motorway
standards has vastly improved safety conditions along a
particularly accident-prone road.
Customers and community
Connecting customers and communities is what we do.
Improving safety, reducing travel times, enhancing comfort
and mobility at a reasonable cost are core to our offerings. We
are committed to building strong, respectful connections with
the communities in which we operate and creating a legacy of
positive impact and engagement.
The customer experience and satisfaction are key focus areas.
Dulles Greenway conducted its first customer satisfaction survey
in May. The results gave an overall satisfaction rating of 91%
establishing a strong baseline for the business.
Introduction of the Warnow Tunnel app in August makes it easier
for customers to make payments, account changes and top-ups,
access trip reports and the latest traffic information. At APRR,
completion of the A79 delivers motorists considerable time
savings, while additional new carpooling spaces in Dijon and
Beaune support shared mobility and reduced congestion.
As COVID-19 restrictions eased across the world, it created
opportunities for connection within our communities again.
Our second annual Run the Greenway event took place in May,
gathering over 1,700 participants and raising US$220,000 for
22 local non-profits, with an additional US$50,000 donated
by Dulles Greenway (see case study on page 21). The ‘hella
Rostock’ marathon also returned, using the Warnow Tunnel
as part of the route for its full and half marathon events.
Our people
Our people are essential to our success. We are committed to
building a team of diverse, passionate, driven and innovative
people. We provide them with the right resources, environment
and learning opportunities to thrive and feel valued for the
work they do. Inspiring and empowering our people helps us
deliver on our strategy.
While the more tangible impacts of the pandemic have receded,
less tangible mental health impacts have continued. As
people continue to grapple with health, social and economic
repercussions, the mental health of our people has never been
more important. We have continued provision of coaching and
support to employees, delivery of targeted workshops, and
investment in development of leaders to ensure they understand
their role in wellbeing. We also continue to embed flexible work
practices and our Flexible Working Policy, launched last year,
has been well received by our people.
For the first time, employee engagement surveys were
completed amongst Dulles Greenway and Warnow Tunnel
teams, with action planning to begin in 2023. Amongst the
corporate team, we saw a 10% improvement in engagement
overall. We observed specific improvements in the connection to
our vision and strategy, collaboration across our global business
and investment in development, while we have more work to
do on feedback and recognition. Our first Diversity, Equity and
Inclusion Diagnostic was also completed at the corporate level,
to get direct feedback on the lived experience for employees
and to help inform what diversity looks like within our employee
base, beyond age and gender. We are pleased to report that
we maintained our 40% commitment to gender diversity, in line
with our target, at Board level, across senior executives1 and
corporate employees.
Environmental stewardship
Combatting climate change and protecting our environments
is a responsibility that belongs to all of us. The impacts
of a disrupted climate and ecosystem affect businesses and
communities alike. We strive to proactively reduce our
environmental footprint, support the health of our ecosystems,
and deliver better outcomes for all our stakeholders.
At APRR, three additional solar farms were opened to support
the low carbon strategy. At Subligny, 26,000 solar panels will
produce the equivalent annual electricity consumption of 4,600
people, or one quarter of the local community’s energy needs.
Electric vehicle charging points have now been deployed across
100% of service areas and the free-flowing toll technology along
the A79 will result in reduced customer emissions through
reduced need for idling, decelerating and accelerating.
At Dulles Greenway, we continue to investigate options for
transitioning the business to renewable electricity.
1. Atlas Arteria Executive Team members, their senior direct reports
and CEOs/MDs of wholly and majority-owned businesses.
ATLAS ARTERIA ANNUAL REPORT 2022 | 23
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS CLIMATE RISKS AND OPPORTUNITIES
Climate change poses risks and opportunities to our business
that we must identify and integrate into our decision-making.
This year, as well as continuing to address our emissions
profile, we have worked to better understand potential
climate-related impacts: to our infrastructure, to our people,
and to our customers and communities.
We are committed to playing our part to reduce our emissions
in line with the Paris Agreement. Our scope 1 and 2 emission
reduction targets are aligned with a 1.5 degree warming
scenario. We have also worked this year to gain insight into
our 2019 (baseline) scope 3 emissions, so that we can set an
appropriate course of action for our value chain emissions.
We are utilising the Taskforce on Climate-related Financial
Disclosures (TCFD) recommendations to guide our approach
to identifying, assessing and disclosing on climate-related
impacts on the business. A three-year roadmap to alignment
with TCFD was developed based on the results of a gap analysis
undertaken during 2021. This year was the first in that multi-
year program towards addressing the TCFD recommendations.
During 2022 we have focused on identifying and analysing
climate-related risks and opportunities and formalising the
structures necessary to embed oversight within the business.
This section summarises our progress and approach. Further
detail will be provided in our 2022 Sustainability Report, to be
released in April 2023.
Governance
The Boards have oversight over environment, social and
governance-related matters, including climate-related issues,
supported by the Audit and Risk Committee and the People and
Remuneration Committee. In 2022, we provided timely updates
to the Boards on climate-related issues as we progressed our
identification and analysis of risks and opportunities. We have
established a regular cadence for reporting climate-related
issues to the Boards and its Committees.
Within the Executive Team, key responsibilities lie with the CEO
and MD, who has ultimate responsibility for delivering on our
climate change approach and reporting to the Boards, and the
CFO, who directs the sustainability and climate change agenda.
A TCFD Working Group was established to inform the
identification and analysis of climate-related issues. Guided
by Atlas Arteria’s Sustainability and Risk functions, the group
includes representatives from key business areas, including
operations, finance, legal, strategy and forecasting. The
group provides a forum for analysing climate-related issues,
exchanging insights, and communicating throughout the
business, including reporting to management and Boards.
Our 2022 Sustainability Report will provide further detail on
the roles and responsibilities of the Boards and management
in relation to the governance of climate-related issues.
Global Corporate HQ, Australia
Challenge VH 2022
24 | ATLAS ARTERIA ANNUAL REPORT 2022
Strategy
This year, we have worked to identify potential physical and
transition risks and opportunities relevant to Atlas Arteria.
We conducted climate-scenario analysis to help assess the
strategic implications of climate change over the short,
medium and long term.
Corporate and business-based subject matter experts were
engaged in desktop analysis and research, interviews and
workshops. Their expertise was utilised in identifying and
prioritising relevant climate-related risks, supported by our risk
management framework and scenario analysis. The process
included climate modelling, which provided insight into potential
climate-related changes (e.g. to temperature, precipitation,
flooding, etc.) in each of our business locations1.
Two scenarios were applied: one aligned with a Net Zero (1.5ºC)
future and one with a Current Policies (3°C+) future. The analysis
provided an initial assessment of the potential impacts of climate-
related risks and opportunities on our business and operations,
enabling the identification of key risks for further consideration.
Climate change scenario overview: a global approach
Net Zero/Orderly Transition
Current Policies/Hot House
Early, ambitious action to
support the transition to a
net-zero CO2 emissions
economy. This includes a Net
Zero 2050 scenario, reflecting
a policy ambition to limit
temperature increase to 1.5°C.
Limited action resulting in
continued global warming
and significant increases in
exposure to physical risks.
This includes a Current Policies
scenario, resulting in potential
temperature increases of 3°C+.
Risk management
Sustainability-related risks, including those associated with
climate change, are identified, assessed, monitored and
integrated in accordance with our Group Risk Management
Framework (see page 28).
In 2022, our TCFD work has enhanced our understanding of
climate-related risks. Potential climate change impacts include
those associated with infrastructure resilience, health and
wellbeing of employees and customer behaviour on our roads.
Further information on key risks and opportunities identified will
be included in our 2022 Sustainability Report.
Going forward, our focus is to appropriately embed the
identification, assessment and review processes into business
practices, both at the corporate and business levels. Importantly,
we will develop targeted risk responses and disclose on these.
Metrics and targets
In addition to managing the impacts of climate change on us,
we are conscious of managing our impacts on the climate. Atlas
Arteria is committed to reducing our emissions and in 2021 we
set reduction targets for our scope 1 and 2 emissions consistent
with a 1.5ºC decarbonisation pathway.
This year, we completed a scope 3 baseline (2019) emissions
assessment for corporate and wholly-owned businesses.
This is a key step in understanding and managing our value-
chain emissions. A scope 3 baseline assessment for APRR
is currently underway.
Disclosure of our performance against our targets will be
included in our Sustainability Report.
1. This excludes Chicago Skyway, which was not under ownership at the time of the assessment.
Boyer and Jugy solar farm, on the A6 (APRR network)
ATLAS ARTERIA ANNUAL REPORT 2022 | 25
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 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, employees, customers, governments and regulators, co-investors, suppliers and the wider communities in which
we operate. We work to keep ourselves informed, proactively engage with our stakeholders and understand and address changing
concerns, expectations and demands.
Stakeholder
How we engaged in 2022
Key topics of interest in 2022
How we added value in 2022
Customers
– In person at customer service
centres, through dedicated phone
lines and email
– Direct engagement at rest areas
and toll plazas
– Customer satisfaction surveys at
APRR and Dulles Greenway
– Motorway websites, radio and apps
– Communication campaigns through
various media including information
on safe travel, benefits offered by
our roads, services provided and
special offers
Communities
– Outreach and engagement on
planned infrastructure developments
and toll operation changes
– Partnerships with community
organisations to support
fundraising, sponsorship and
other community support
– Participation of key executives
in community groups, e.g. CEO
Dulles Greenway is on the Board
of the Oatlands Historic House
and Gardens and the Northern
Virginia Transportation Alliance
– Partnerships with local authorities
along the toll roads
– Up-to-date information
on traffic, roadworks,
accidents and
other hazards
– Fair pricing and value,
including distance-
based pricing models
on Dulles Greenway
– Comfort, safety,
reliability and ease
of travel
– Availability of relevant
customer services
through apps and
web applications
– Assurance of road
safety, including a good
winter service
– Information on planned
and existing works that
may result in disruptions
– Impacts of motorways,
e.g. on noise, emissions,
visual amenity
– Innovation and
technology to contribute
in the decarbonisation of
toll roads
– Local community
support by the
businesses
Employees
– Team meetings
– Town Halls
– ‘All in Days’ to encourage
connection/collaboration time in
corporate locations
– Participation in Board and Committee
meetings and off-site sessions
– ‘Safety moments’ and briefings
– Annual employee
engagement survey
– Ad hoc surveys – i.e. Diversity,
Equity and Inclusion Diagnostic,
post transaction survey, internal
audit questionnaire
– Ad hoc and quarterly feedback
processes
– Team/company celebrations
– Formal development programs
(i.e. senior leader program)
– Safety and wellbeing
– Flexible working and
creating the right
balance
– Career opportunities,
professional
development,
recognition and reward
– Compensation and
benefits
– Equity and inclusion
– Effective collaboration
across a growing global
organisation
– Business performance
and growth strategy
26 | ATLAS ARTERIA ANNUAL REPORT 2022
– Providing safe, fast and reliable travel,
connecting people and trade in the areas
we operate
– Making travel easy, e.g. with real-time
information on driving conditions, improved
apps to access network information, effective
management of roadworks and automated
technology to overcome lost or mis-read
toll devices
– A focus on safety: reviewing accident response,
safety procedures and running customer safety
campaigns to promote safe motorways
– Access to lower priced fuels in France and
discounts offered for frequent users and for
use of electric vehicles in 2023
– In France, promoting secured parking areas
for heavy-good vehicles
– Engagement with governments towards
fair pricing and a quality network
– Keeping commerce connected and the
economy moving
– Job creation and access, through use of
our motorways, infrastructure development,
work experience programs for disadvantaged
groups and taxes paid
– In France, promoting reserved lanes for regular
public transport services and car sharing
initiatives in urban areas, with High Occupancy
Vehicle lanes and carpooling carparks
– Engagement with local communities to address
concerns and improve the amenity of our
networks, e.g. through landscaping and noise
reduction initiatives
– Supporting community services and local
community groups, e.g. providing free travel
for emergency services and school groups,
sponsorships and fundraising events
– Promotion of cultural heritage and tourism
through art along the APRR network
– Initiatives to improve employee safety
– Competitive pay and compensation
– Launched revised strategy for the business
which underpinned key projects for 2022
– Action planning to review survey outcomes
and agree key areas of focus for 2023
– Ongoing review and consideration of employee
policies and processes
– Maintain and improve programs meaningful
to our people, e.g. development programs,
Employee Assistance Program, wellbeing
workshops and ‘All in Days’ to help foster
connection across teams
– Actively cultivate feedback processes
across all areas of the business
Stakeholder
How we engaged in 2022
Key topics of interest in 2022
How we added value in 2022
Securityholders
– Annual and half-year briefings
– Annual Report and
Sustainability Report
– Quarterly traffic releases
– AGM
– Annual program of institutional and
retail investor engagement including
one-on-one meetings
– Investor centre on website
– Semi-annual investor survey
– Proxy advisor and ESG engagement
– Chicago Skyway capital
raising engagement
– Distributions
– Traffic performance
and trends
– IFM securityholding
– Chicago Skyway
acquisition and
equity raise
– Inflation impact
– Organic growth
opportunities at APRR
and Dulles Greenway
– Governance and risk
management
– Sustainability and ESG
– Capital management
– Record distribution guidance of 40 cps,
and strong TSR of 8.7%
– Delivering on strategic objectives to provide
longer-term value creation and sustainable
distributions (including the acquisition
of a majority interest in Chicago Skyway,
commencement of tolling on the A79, and
agreement of the Investment Plan)
– Informative management briefings and
ongoing access to senior management
– Proactive engagement to understand
information needs
– Transparency to provide clear insight into
business performance, risks and opportunities
Co-investors
– Monthly meetings
– Ad hoc meetings and interactions
– Board meetings, at least quarterly
– Shared learnings
(e.g. on safety, operations)
Governments/
regulatory
authorities
– Close coordination with
governments, local authorities
and departments of transport
– Engagement for project development
to achieve
common goals
– Achieving alignment on
– Trusted partner, focused on effective
decisions made
collaboration
– Ensuring all co-investors
are informed on key
topics for jointly-owned
businesses
– Expert operating and technical capabilities,
contributing ideas and insights towards
ongoing business success
– Promoting the business’s short and
– Opportunities for further
long-term interests
collaboration
– Positive and
constructive relationship
with the grantors
(and governments
if applicable) for all
businesses
– Compliance with
concession contract and
regulations
– Focused on understanding government
needs in order to provide solutions
– Working with government to assist in
developing and deploying public policy
outcomes that provide better services
and experiences, e.g. roll out of electric
vehicle charging stations to all APRR’s
service areas
– Contributing to constituents and
– Support for fulfilment of
government aims
communities, e.g. through improved safety
and community support
Partners and
suppliers
– Due diligence and compliance
activities to ensure alignment
of objectives and values
– On-ground training and shared
learnings with key contractors
– Project management engagements
– Fair and timely
payments
– Application of important
standards and
expectations,
e.g. for health and
safety, modern slavery
and diversity
– Ongoing management, oversight and
improvement of motorway infrastructure
– Building long-term and mutually beneficial
relationships with partners and suppliers
– Enhanced supplier engagement processes,
including through a new third-party due
diligence tool and targeted engagement
with suppliers
– Promoting responsibility through the
supply chain, e.g. with regard to safety, the
environment and responsible employment,
by embedding compliance with our Supplier
Code of Conduct in supplier engagements
ATLAS ARTERIA ANNUAL REPORT 2022 | 27
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS RISK MANAGEMENT
Risk management framework
Atlas Arteria’s risk management framework sets out our 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.
These are reviewed annually by management and the Boards to ensure our approach continues to be sound and that it achieves
an appropriate balance between effective risk management and the achievement of our strategic objectives.
Atlas Arteria has adopted the ‘Three Lines of Accountability’ model to support effective monitoring and oversight of risk across its
operations. This model is consistent with Atlas Arteria’s objective to actively manage risk rather than eliminate it, recognising that
risk presents opportunities as well as challenges.
Boards and Committees
Executive Management
Business Management
First Line
Day-to-day
risk management
decision making
Risk and Compliance
Management
Second Line
Monitoring and
oversight of the level
of risk and appetite
Independent Assurance
Third Line
Includes Internal Audit,
External Audit and third-
party specialist audits
and reviews
Role of the Boards in risk management
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 periodic 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
The past 12 months has seen significant change both within
Atlas Arteria, as we continue to deliver on our strategy, and from
the external environment. Key themes in the macro environment
have included continuing impacts from COVID-19 and inflation
factors on traffic, revenues and driver behaviour, increasing
focus on addressing climate impacts and transitioning to low
carbon alternatives and the continued growth in the occurrence
of cyber-attacks.
Atlas Arteria’s integrated risk management framework supports
the ongoing maturity uplift required to drive an agile approach
to risk management and provide appropriate risk information
and insights to support management activities and decision
making. Risk integration work undertaken in 2022 has delivered
a more resilient business, with improved readiness to respond
to external threats and opportunities, and to maintain a strong
internal control environment to facilitate the achievement of
business and strategic objectives.
28 | ATLAS ARTERIA ANNUAL REPORT 2022
Nature of risk
Inherent risk
Key management actions
2022 insights
Risk increasing
Economic and market conditions
Ongoing economic and fiscal
uncertainty across Europe and
the US and changing consumer/
workforce behaviours in the post-
COVID world present a risk for
Atlas Arteria.
Atlas Arteria is positively leveraged
to inflation with CPI-linked tolls
at the majority of our businesses
and with most debt fixed. However,
exposure to fluctuations in FX rates
remains.
Government and
regulatory policies
Stable
A change in government or
government policy can impact Atlas
Arteria’s ability to achieve its long-
term strategic objective. The 2022
election cycle for Virginia, US mid-
terms and France passed without
adversely impacting our businesses.
Risk increasing
Risk increasing
Environmental, Social and
Governance (ESG) practices
Atlas Arteria recognises the
increasing importance of
understanding the risks and
opportunities that climate change
presents, as well ensuring we are
supporting the communities in which
we operate. We also appreciate the
need for transparency in reporting
on these matters and the trend
towards regulation in this area.
IT/cybersecurity
With cyber-attacks continuing to
increase globally, it is important
that Atlas Arteria and its underlying
businesses have effective, secure
and reliable technology systems
in place to protect and maintain
information and operations.
– Ongoing monitoring and
assessment of economic variables
and understanding how these
impact traffic volumes and mix as
well as growth opportunities at
each business.
– Assessment of traffic scenarios
under various economic and
market conditions enables forward
based planning.
– Ongoing assessment of local
and global economic threats and
opportunities, their impact on
financial results, access to capital
and liquidity across the business.
– Our businesses continued to
demonstrate their resilience
in 2022, continuing the traffic
recovery post COVID-19. See
individual business sections
for detailed traffic information.
– The acquisition of Chicago
Skyway delivers financial,
geographical, currency and
distributions diversification
to Atlas Arteria’s business.
– Atlas Arteria fully hedged the
acquisition price at the time of
the Chicago Skyway acquisition
to manage FX risk.
– Regular engagement across
– Positive engagement with the
various levels of government and
regulatory authorities in relevant
jurisdictions.
– Participation in policy discussions
and education as to how our roads
form effective parts of the relevant
transport networks.
Virginian Administration in 2022
and the continued strengthening
of connections with community
stakeholders has been further
supported by the appointment of a
new public affairs specialist within
our US team.
– Our track record of working with
the French Government was
further extended with the approval
of our Investment Plan in early
2023. See page 14 for more detail.
– Our annual Sustainability Report
– We have undertaken an
outlines key safety, environmental
and social risks, how Atlas Arteria
intends to manage those risks
and key priorities in responding to
those risks.
– Targets and metrics have been
established to track performance
across material ESG matters.
– Atlas Arteria and its underlying
businesses undertake regular
reviews across key technology
platforms to ensure they are fit-
for-purpose and maintain effective
security controls.
– Atlas Arteria maintains effective
data and cyber risk management
practices to protect its businesses
and customers from exposure to
data breaches.
– Cyber risk ‘deep dives’ and
information sessions periodically
undertaken with the Executive and
Boards, and regular awareness
training sessions delivered across
Corporate and the businesses.
assessment of climate risks
and opportunities in the first
phase of work underway to
align our ESG practices with the
recommendations of the Task
Force on Climate-Related Financial
Disclosures (TCFD). See pages 24
and 25 for more detail.
– We released our second annual
Modern Slavery Statement
which can be found on the Atlas
Arteria website.
– We have enhanced our monitoring
and response readiness in
recognition of the increasing
external threat landscape,
providing improved visibility of
IT and OT security management
practices to our Board, with
continual review and uplift of
our cyber resilience practices an
ongoing focus.
– An IT breach event at one of our
businesses in 2022 reinforced
the importance of employee
awareness of IT security practices,
including social engineering
activity and PC security. The event
itself had limited impact on the
business: relevant authorities were
notified, and our incident response
plan was invoked, providing an
opportunity to test our plan with
a real life example.
ATLAS ARTERIA ANNUAL REPORT 2022 | 29
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS RISK MANAGEMENT
Nature of risk
Inherent risk
Key management actions
2022 insights
Organisational capability
Stable
It is important that within Atlas
Arteria’s Corporate headquarters
and at each business there is
sufficient depth, understanding and
expertise to effectively deliver on the
company’s strategy.
Stable
Operational risk management
It is important that each business
and their operations have effective
controls in place to ensure the
long-term integrity and safety of
our businesses, and sustainability
of returns through a balance
of investment and cash flow
management.
– Atlas Arteria has created a
– We have a highly skilled workforce
in place with depth across key
capability areas, as demonstrated
through the success of the Chicago
Skyway acquisition.
– Following the Chicago Skyway
acquisition, focus has turned to
a smooth transition and ensuring
the business is optimised to best
deliver on our objectives from
the acquisition.
– In 2022, management undertook
‘deep dive’ reviews within our
businesses, each focusing on
specific operational risk areas,
including financial processes,
workplace health and safety
and asset integrity.
– Following acquisition, Chicago
Skyway is being incorporated
into Atlas Arteria’s risk profile
to support oversight of key
business processes.
compelling employee experience
designed to attract, retain and
develop the right people in the
right roles.
– People processes are supported
by a clear vision and values
statement, remuneration
framework, and learning and
development program, along
with a contemporary approach to
flexibility, diversity and inclusion.
– There is an active feedback
approach in place including an
annual employee engagement
survey which provides critical
insight to management and Board.
– The management teams of each
business employ a disciplined
approach to operations and
maintenance to optimise
business performance and
customer experience.
– The asset integrity of all
businesses is tracked through
asset management inspection
and evaluation cycle to ensure
a continuous assessment
and oversight.
– Operational risk management
arrangements, including
contractual and legal frameworks,
are regularly reviewed to ensure
that the organisational needs
are met.
– A risk management policy
and framework and internal
reviews support compliance with
regulatory obligations and key
business processes.
30 | ATLAS ARTERIA ANNUAL REPORT 2022
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 governance section of the Atlas Arteria website:
– Overview of Legal Framework;
– ATLIX Bye-Laws;
– ATLAX Constitution;
– Atlas Arteria Cooperation Deed;
– ATLAX and ATLIX Board & Committee Charters; and
– 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.
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 their 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 2022 Corporate Governance Statement has
been approved by the Boards and outlines our main corporate
governance practices for the year ended 31 December 2022.
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, Securities
Trading Policy, Anti-Bribery & Corruption Policy and Conflicts
of Interest (Directors) Policy;
– external communications and market disclosures; and
– risk management and corporate reporting.
Our 2022 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/
aboutus. These governance documents are regularly reviewed
and updated to ensure they reflect emerging governance issues
and regulatory developments relevant to Atlas Arteria and
remain consistent with the objectives of the Boards.
For more information go to atlasarteria.com
For more information go to atlasarteria.com
Atlas Arteria Structure
Boards and
Management
ATLAX
Stapled Cooperation Agreement
ATLIX
US Investment
European and
US Investments
ATLAS ARTERIA ANNUAL REPORT 2022 | 31
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS CORPORATE GOVERNANCE
BOARD OF DIRECTORS – ATLAX BOARD
Graeme Bevans
Nationality: Australian
Country of residence: Australia
Chief Executive Officer and
Managing Director of ATLAX
since 1 April 2019.
Graeme Bevans 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
America and South America.
Graeme is Managing Director
of ATLAX and holds no other
current directorships.
Ariane Barker
BEc&Math (BU)
Nationality: Australian
Country of residence: Australia
Non-executive Director of
ATLAX appointed on 1 March
2021. Chair of the ALTAX
Audit and Risk Committee
(to 30 June 2022).
Retired from the Board on
31 December 2022.
Ariane Barker brings
extensive business and
financial services experience,
with over 20 years’ experience
in senior executive roles in
Australia and overseas at
JBWere (part of National
Australia Bank), HSBC,
Goldman Sachs and
Merrill Lynch.
Ariane was previously the
CEO of Scale Investors Ltd
where she worked to activate
investment capital for female
entrepreneurs and gender
balanced startups to
support growth for early
stage businesses.
Other listed company
directorships (past three
years): Non-executive Director
(since November 2015) of IDP
Education Limited (ASX:IEL).
Other directorships
and appointments:
Director, Commonwealth
Superannuation Corporation.
Member of the Investment
Committee at the Murdoch
Children’s Research Institute.
David Bartholomew
BEc (Hons) (AU), MBA (AGSM)
Nationality: Australian
Country of residence: Australia
Non-executive Director
of ATLAX appointed on
1 October 2018. Chair of
the ATLAX People and
Remuneration Committee.
David Bartholomew has
over 30 years’ experience
across the energy utilities,
transportation and
industrial sectors.
David was 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 and
is a former Director of the
Power and Water Corporation
(Northern Territory).
Other listed company
directorships (past three
years): Chair (since March
2021) of Iris Energy Limited
(NASDAQ: IREN).
Other directorships and
appointments: Director,
Endeavour Energy, Director,
Keolis Downer. External
Independent Chair of the
Executive Price Review
Steering Committee of
AusNet Services.
Debbie Goodin
BEc (AU), FCA
Nationality: Australian
Country of residence: Australia
Non-executive Director
of ATLAX appointed on
1 September 2017, Chair of
ATLAX effective 1 November
2020. Non-executive Director
of ATLIX appointed on
1 November 2020. Chair of
the ATLAX Nomination and
Governance Committee.
Debbie Goodin has extensive
director experience as well
as over 20 years’ senior
management experience with
professional services firms,
government authorities and
ASX-listed companies across a
broad range of industries and
service areas.
Among other executive roles,
Debbie was COO for an ANZ
subsidiary of Downer EDI
Limited and Acting CFO
and Head of Mergers and
Acquisitions and Global
Head of Operations at Coffey
International Limited.
Other listed company
directorships (past three
years): Non-executive Director
(since September 2015)
of APA Group (ASX:APA).
Non-executive Director (since
December 2022) of Ansell
Limited (ASX:ANN). Non-
executive Director of Senex
Energy Limited (ASX:SXY)
(May 2014 to November 2020).
Non-executive Director of
Ooh! Media Limited (ASX:OML)
(November 2014 to February
2020).
Other directorships and
appointments: Director,
Australia Pacific Airports
Corporation Limited (March
2020 to June 2022).
32 | ATLAS ARTERIA ANNUAL REPORT 2022
BOARD OF DIRECTORS – ATLIX BOARD
John Wigglesworth
BEc (MACQ), FCA
Nationality: Australian
Country of residence: Australia
Non-executive Director of
ATLAX appointed on 1 January
2023. Chair of the ATLAX Audit
and Risk Committee (from
1 January 2023).
John Wigglesworth is a
Chartered Accountant with
37 years’ professional
experience, including nearly
25 years as a Partner at
KPMG, both in Australia
and internationally. During
this time, he held several
leadership positions across
operations, industry sectors
and business development.
John has extensive experience
working with ASX listed and
leading global companies, with
specific expertise in external
and internal audit, financial
reporting, accounting systems
and controls, governance and
risk management.
Other listed company
directorships (past three
years): Nil.
Other directorships and
appointments: Member
of Council, Macquarie
University. Non-executive
Director, MQ Health. Non-
executive Director, The Sydney
Children’s Hospital Network.
Non-executive Director,
Independent Reserve.
Jean-Georges Malcor
Ecole Centrale de Paris (Eng),
MSc (Stanford)
Nationality: French/Australian
Country of residence: France
Non-executive Director
of ATLAX appointed on
1 November 2018. Chair
of the ATLAX Audit and
Risk Committee
(to 31 December 2022).
Jean-Georges Malcor is an
experienced executive and
Non-executive Director and
has a long track record in
large international projects
and developments.
His executive experience
includes eight years as CEO
at 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 and was Managing
Director of ADI (Australian
Defence Industry).
Jean-Georges has
demonstrated expertise
in 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.
Other listed company
directorships (past
three years): Director
of STMicroelectronics
N.V. (NYSE:STM, Borsa
Italiana:STIM.MI, Euronext
Paris:STM.PA) (May 2011
to June 2020).
Other directorships and
appointments: Director,
ORTEC. Director, Fives’ Group,
Chair, ENSTA Bretagne School
of Engineering.
Jeffrey Conyers
BA (Toronto)
Nationality: Bermudian
Country of residence: Bermuda
Chair and Non-executive
Director of ATLIX since
establishment on
16 December 2009. Chair
of the ATLIX Nomination
and Governance Committee.
Jeffrey Conyers will retire as
Chair and Director of ATLIX
with effect from 1 March 2023.
Jeffrey Conyers is 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.
He was a founding member,
and remains a member, of
the Council 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.
Other listed company
directorships (past three
years): Nil.
Other directorships and
appointments: Council
Member of the Bermuda
Stock Exchange. Director,
The Steamship Mutual
Underwriting Association
Trustees (Bermuda) Limited.
Director, Polaris Holding
Company Limited.
Director, Bermuda Aviation
Services Limited.
Fiona Beck
BMS (Hons) Waikato (NZ) CA
Nationality: New Zealander
Country of residence: Bermuda
Non-executive Director
of ATLIX appointed on
13 September 2019. Chair
of the ATLIX People and
Remuneration Committee.
Fiona Beck will become the
Chair of ATLIX with effect
from 1 March 2023.
Fiona Beck has over 20 years’
leadership experience in
listed and unlisted companies,
having held senior executive
and governance positions
in large infrastructure
companies, including as
the President and CEO of
Southern Cross Cable Limited,
a submarine fiberoptic cable
company, for 13 years.
In addition, Fiona is a
Chartered Accountant
and brings expertise in
technology, cyber
security, data analysis,
and infrastructure asset
management in a
global environment.
Other listed company
directorships (past three
years): Non-executive Director
(since July 2020) of IBEX
Limited (NASDAQ:IBEX).
Non-executive Director (since
October 2020) of Oakley
Capital Investments Limited
(LSE:OCI). Non-executive
Director (since April 2020)
of Ocean Wilsons Holdings
Limited (LSE/BSX: OCN).
Non-executive Director of
One Communications Ltd
(BSX:ONE.BH) (July 2013
to November 2020).
Other directorships and
appointments: Director,
Bermuda Business
Development Agency.
ATLAS ARTERIA ANNUAL REPORT 2022 | 33
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS Debbie Goodin
See page 32 for full details.
CORPORATE GOVERNANCE
BOARD OF DIRECTORS – ATLIX BOARD
Andrew Cook
BA (UWO), CPA (Ontario)
Nationality: Bermudian
Country of residence: Bermuda
Non-executive Director
of ATLIX appointed on
26 November 2020.
Andrew Cook has extensive
executive, financial,
operational and capital
market experience having
been the founding CFO of
several organisations and
overseeing the development
and growth of accounting,
finance, treasury and investor
relations departments.
He brings significant global
M&A experience having
served as the President and
CFO of Harbor Point (and
later as President of Alterra
Bermuda) as well as leading
successful IPOs at LaSalle
Re, Axis Capital and Global
Partner Acquisition Corp.
Andrew was formerly the
Chief Executive Officer of
GreyCastle Life Reinsurance
and was on the Boards of Blue
Capital Reinsurance Holdings
Limited and GreyCastle Life
Reinsurance (SAC) Ltd.
Other listed company
directorships (past three
years): Non-executive Director
of Global Partner Acquisition
Corp II (NASDAQ:GPACU)
(January 2021 to January
2023). Non-executive
Director of Blue Capital
Reinsurance Holdings Limited
(NYSE:BCRH) (September
2013 to July 2020).
Other directorships and
appointments: Chair,
OmegaCat Reinsurance Ltd,
Director, Aspida Holdings Ltd,
Ferian Holdings Ltd.
Caroline Foulger
BA (Hons) University of
London UK, FCA (UK), CA
(Bermuda)
Nationality: British/Bermudian
Country of residence: Bermuda
Non-executive Director of
ATLIX appointed on 19 May
2020. Chair of the ATLIX Audit
and Risk Committee.
Caroline Foulger 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, leading
the insurance practice
in Bermuda.
Caroline was the founding
Chair of the Bermuda
Business Development
Agency and served in 2017 as
a member of the Blue Ribbon
Committee regarding the
feasibility and financing of
a new Bermuda Airport.
Other listed company
directorships (past three
years): Chair (since 2018)
and Non-executive Director
(since June 2016) of Oakley
Capital Investments Limited
(LSE:OCI). Chair (since
September 2022) and Non-
executive Director (since
June 2020) of Ocean Wilsons
Holdings Limited (LSE/BSX:
OCN). Non-executive Director
of Hiscox Limited (LSE:HSX)
(January 2013 to May 2022).
Other directorships and
appointments: Chair, Mosaic
Insurance.
34 | ATLAS ARTERIA ANNUAL REPORT 2022
The number of Board, and Board Committee, meetings held during the year and each Directors’ attendance at those meetings
are set out below. In addition, ad hoc committees were also held as required for transactional activities.
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
16
16
16
16
16
15
16
16
13
16
N/A
N/A
6
6
6
6
6
6
6
6
2
2
2
2
2
2
2
2
2
2
5
5
5
N/A
5
5
5
5
N/A
5
N/A
N/A
6
6
N/A
6
6
6
N/A
6
ATLIX Directors
Fiona Beck (b)
Jeffrey Conyers
Andrew Cook
Caroline Foulger (c)
Debra Goodin
(a) Ad hoc committee meetings were held in relation to working groups relating to the Chicago Skyway transaction and associated Equity Raise.
(b) Ms Beck missed a special purpose Board meeting due to a pre-existing commitment.
(c) Ms Foulger was absent from some unscheduled Board meetings held during the year for which short notice was provided and due to pre-existing commitments.
Where a director is unable to attend a meeting, they are provided with a briefing on the key matters and are given an opportunity to provide input prior to the meeting.
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
16
16
16
16
16
16
16
16
15
16
6
N/A
N/A
6
6
6
N/A
N/A
6
5
2
2
2
2
N/A
N/A
2
2
2
2
5
5
N/A
5
N/A
5
5
N/A
5
N/A
6
6
6
N/A
N/A
6
6
6
N/A
N/A
ATLAX Directors
Debra Goodin
David Bartholomew
Graeme Bevans
Jean-Georges Malcor (b)
Ariane Barker
(a) Ad hoc committee meetings were held in relation to working groups relating to the Chicago Skyway transaction and associated Equity Raise.
(b) Mr Malcor missed a special purpose Board meeting due to a pre-existing commitment.
Where a director is unable to attend a meeting, they are provided with a briefing on the key matters and are given an opportunity to provide input prior to the meeting.
Company Secretaries
Clayton McCormack, BCom, LLB
General Counsel and Company Secretary
Appointed as Company Secretary of Atlas Arteria Limited on 1 April 2019. A lawyer and company secretary with over 25 years’
experience in private practice and corporate roles.
Paul Lynch, BCom, LLB
Joint Company Secretary
Appointed as an additional Company Secretary of Atlas Arteria Limited on 26 August 2021. A company secretary and lawyer
with approximately 15 years’ experience working in the ASX listed environment.
ATLAS ARTERIA ANNUAL REPORT 2022 | 35
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS FINANCIAL OVERVIEW
Financial Highlights
Statutory results
Atlas Arteria consolidates results for both Dulles Greenway and Warnow Tunnel and equity accounts for its investments in APRR,
ADELAC and Chicago Skyway. Accordingly, the results for APRR, ADELAC and Chicago Skyway are disclosed in Atlas Arteria’s
income statement under the ‘share of profit/(loss) from equity accounted investments’ and ‘share of other comprehensive income
from equity accounted investments’ line items, and in the ‘equity accounted investments’ line item in Atlas Arteria’s balance sheet.
Combined with the corporate level expense, these make up Atlas Arteria’s statutory results for the period.
Included within the statutory results are a number of ‘Notable Items’ that are not related to underlying operational performance.
The impact of Notable Items on the statutory results is analysed below:
Atlas Arteria A$m
Revenue and other income
– Toll revenue
– Other income
– Interest Income
Total revenue and other income (excluding Notable Items)
Operating expenses
– Business operations
– Corporate costs
Depreciation and amortisation
Total operating expenses (excluding Notable Items)
Net finance costs
Share of profit/(loss) of equity accounted investments
Income tax benefit/(expense)
Net Profit/(Loss) after tax (excluding Notable Items)
Notable Items
– Costs associated with 'IFM' engagement (a)
– Transaction costs associated with the Chicago Skyway acquisition (a)
– Hedge ineffectiveness arising from the deal contingent premium on the swap for
the Chicago Skyway acquisition (b)
– FX impacts of significant transactions during period (non-cash) (b)
– Interest on funds held for the Chicago Skyway acquisition (c)
– Warnow Tunnel net accounting impacts of capital restructure (non-cash)
Net Profit/(Loss) after tax
(a) Reported in ‘Total operating expenses’ in the Statutory Results.
(b) Reported in ‘Net finance costs’ in the Statutory Results.
(c) Reported in ‘Interest Income’ in the Statutory Results.
2022
2021
% Chg
116,728
99,530
1,513
6,872
985
140
125,113
100,655
(38,027)
(32,494)
(66,245)
(136,766)
(82,875)
336,380
(3,191)
238,661
(2,320)
(2,503)
(10,926)
2,843
15,256
–
241,011
(34,882)
(29,068)
(61,480)
(125,430)
(81,055)
284,051
904
179,125
–
–
–
–
–
(15,428)
163,697
17%
54%
4,809%
24%
(9%)
(12%)
(8%)
(9%)
(2%)
18%
(453%)
33%
–
–
–
–
–
–
47%
The net profit for 2022 predominantly reflects the continued strong traffic performance at APRR as well as the commencement of
tolling on the A79 in November, improved traffic performance at the Dulles Greenway and the first time contribution from Chicago
Skyway for the month of December reflected in the ‘Share of profit/(loss) of equity accounted investments’ and interest income.
On 1 December 2022, Atlas Arteria acquired a 66.67% interest in Calumet Concession Partners Inc (CCPI) which indirectly owns
100% of Skyway Concession Company LLC, the concessionaire of the Chicago Skyway. The Chicago Skyway acquisition was funded
via a fully underwritten 1 for 1.95 accelerated non-renounceable entitlement offer raising $3,098.4 million. Costs associated with the
execution of the Chicago Skyway acquisition, that have not been capitalised are recognised as Notable Items as they are not related
to underlying operational performance.
36 | ATLAS ARTERIA ANNUAL REPORT 2022
36 | ATLAS ARTERIA ANNUAL REPORT 2022
Cashflows
Atlas Arteria received two main distributions from APRR during 2022, being $201.4 million (€134.0 million) in March based on the
second half performance for 2021, and $198.6 million (€134.0 million) in September, reflecting the first half performance for 2022.
An additional distribution of $6.8 million (€4.4 million) was received in January 2022 for funds which were held back from the
September 2021 distribution.
Whilst distributions from APRR continue to be the primary source of cash for Atlas Arteria, in 2022 Atlas Arteria received its first
full year of distributions from Warnow Tunnel of $12.9 million (€8.6 million). From 2023, Atlas Arteria will also begin receiving
distributions from Chicago Skyway.
Atlas Arteria raised $3,098.4 million issuing 491.8 million new ordinary stapled securities. The funds were used to acquire
Chicago Skyway.
The second half distribution for 2021 consisting of an ordinary dividend of 20.5 cps was paid in full on 31 March 2022. The first half
distribution for 2022 consisting of an ordinary dividend of 20.0 cps was paid in full on 3 October 2022.
After the equity raise and costs associated with the Chicago Skyway acquisition, payment of distributions and operational activities
for the year, the corporate balance sheet held $172.4 million in cash as at 31 December 2022.
Business Operations
A summary of the underlying results for each business is shown in the table below.
Business
APRR Group 1
ADELAC
Warnow Tunnel
Chicago Skyway 2
Dulles Greenway
Weighted Average 3
Weighted Average, excl Chicago Skyway
2022 Traffic
2022 Toll Revenue 4,5
2022 EBITDA 4,5
VS 2021
VS 2019
VS 2021
VS 2019
VS 2021
VS 2019
8.2%
21.4%
3.4%
2.2%
6.6%
7.8%
8.3%
2.1%
(0.1%)
(8.6%)
9.1%
(30.8%)
(0.5%)
(1.2%)
8.8%
27.9%
5.2%
5.1%
12.0%
9.0%
9.3%
6.0%
7.7%
(3.4%)
30.8%
(24.9%)
4.7%
3.0%
10.1%
25.1%
5.6%
4.8%
16.5%
10.3%
10.8%
7.3%
5.8%
(11.3%)
33.2%
(26.4%)
5.6%
3.7%
1. APRR Group includes APRR, AREA and A79 concessions.
2. Atlas Arteria completed the acquisition of a 66.67% majority interest in the Chicago Skyway on 1 December 2022, however data for the full period has been provided
to allow comparisons with prior periods.
3. Refer to slide 40 of the Investor Presentation lodged with the ASX on 23 February 2023 for weighted average calculation methodology.
4. Revenues and operating costs are presented under IFRS in local currency, excluding impacts of IFRIC 12. This adjusts for concession upgrades to align EBITDA margin
with underlying business performance.
5. Toll revenue % and EBITDA % change is calculated using the respective businesses local currencies.
The weighted average results aggregate the financial results of each of Atlas Arteria’s businesses according to its economic interests
from ongoing operations.
ATLAS ARTERIA ANNUAL REPORT 2022 | 37
ATLAS ARTERIA ANNUAL REPORT 2022 | 37
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS FINANCIAL OVERVIEW
APRR Group
APRR Group1 100% (€m)
Toll revenue
Other revenue
IFRIC 12 adjustment for capital spend
Total revenue
Purchases and external charges
Personnel costs
Taxes
IFRIC 12 adjustment for capital spend
Other
Total expenses
Total EBITDA
Total EBITDA (proportional, $m)
Provisions
Net interest expense
Depreciation and amortisation
APRR corporate income tax
Share of profit/(loss) of associates (incl ADELAC)
Other
Consolidated NPAT
1. APRR Group includes APRR, AREA and A79 concessions.
2022
2021
% change
2,686.0
2,468.2
132.5
335.4
101.0
302.8
3,153.8
2,872.0
(174.9)
(216.8)
(347.0)
(335.4)
4.8
(1,069.3)
2,084.6
985.0
(31.8)
(99.1)
(504.3)
(362.5)
2.9
(33.6)
1,056.3
(155.2)
(213.6)
(315.7)
(302.8)
8.1
(979.2)
1,892.8
928.7
(48.9)
(94.4)
(473.2)
(330.1)
(2.6)
(10.4)
933.2
8.8%
31.2%
10.8%
9.8%
(12.7%)
(1.5%)
(9.9%)
(10.8%)
(41.0%)
(9.2%)
10.1%
6.1%
35.0%
(5.0%)
(6.6%)
(9.8%)
211.8%
(222.7%)
13.2%
Traffic for 2022 was 8.2% higher than 2021 and 2.1% higher than 2019, supported by a busy winter and summer holiday period driving
light vehicle traffic, and consistent heavy vehicle traffic throughout the year (for more detail, see APRR on pages 12 to 15).
For the 2022 year, light vehicle traffic as a percentage of total traffic increased from 83.1% in 2021 to 84.1% in 2022, such that the
light vehicle and heavy vehicle mix continues to be more in line with levels observed pre-pandemic (2019: 84.2% of total traffic was
light vehicles). As tariffs for heavy vehicles are around three times higher than those for light vehicles, weighted average tolls also
continued to return to normalised levels in 2022. Total toll revenue for 2022 was €2.7 billion (2021: €2.5 billion) which comprised 66%
from light vehicle traffic and 34% from heavy vehicle traffic (2021: 64% light vehicle and 36% heavy vehicle; 2019: 66% light vehicle
and 34% heavy vehicle).
Tolling commenced on the A79 on 4 November 2022 following the completion of construction. The A79 concession extends to 2068
and the road currently supports significant heavy vehicle traffic.
APRR Light Vehicle/Heavy Vehicle Traffic and Toll Revenue Split
t
i
l
p
S
c
fi
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
(
2022
2021
2020
2022
2021
2020
84%
83%
82%
66%
64%
61%
0%
20%
40%
60%
Light vehicle
Heavy vehicle
16%
17%
18%
34%
36%
39%
80%
100%
38 | ATLAS ARTERIA ANNUAL REPORT 2022
38 | ATLAS ARTERIA ANNUAL REPORT 2022
Other revenue increased during the year as a result of the Fulli business which generated €40.7 million (2021: €26.7 million) of
revenue. Fulli comprises APRR’s operated service areas, providing competitive fuel prices to customers on the motorway. This
enables customers to complete their journey on the APRR network rather than diverting to off-network fuel stations. During the year,
Fulli revenue increased due to higher traffic and more customers accessing the competitive prices, as well as from the increase in
fuel prices.
Application of AASB Interpretation 12 Service Concession Agreements (IFRIC 12) relating to capital spend during the year saw
revenue of €335.4 million (2021: €302.8 million) offset by a corresponding expense.
Operating costs (ex IFRIC 12 adjustments) increased by 8.5% as a result of costs associated with the integrated Fulli business
(€39.9 million (2021: €26.0 million)), and higher operating taxes. Operating taxes were driven by an increase in the TAT as a result of
higher traffic and an increase in land tax which was assessed on turnover from the prior year reflecting the traffic increase in 2021.
2022 Operating costs
2021 Operating costs
47%
24%
29%
46%
23%
31%
Purchases and external charges
Personnel costs
Taxes
EBITDA margins progressively improved from 2015 but were impacted in 2020 and 2021 due to the COVID-19 movement restrictions
on traffic. In addition, from 2021 the commencement of the Fulli business has marginally diluted the EBITDA margins.
APRR EBITDA margins (excluding IFRIC 12)
90%
85%
80%
75%
70%
87.1%
87.5%
87.9%
85.7%
86.0%
86.3%
72.4%
2017
73.8%
74.4%
71.4%
73.7%
74.0%
2018
2019
2020
2021
2022
Excluding operating taxes
Including operating taxes
Net interest expense at APRR increased by 5.0% driven by the increase in debt balances over the period. During the year, APRR
issued $786.2 million (€500.0 million) of bonds under its Euro Medium Term Note Program at 98.761% of par with a coupon of 1.875%,
the proceeds of which were used for general corporate purposes. This demonstrates the continued support by the financial markets
for the APRR business. It provides APRR with additional liquidity, extends its weighted average debt maturity and strengthens APRR’s
capacity for future growth.
During the year, Fitch Ratings upgraded its credit rating for APRR from ‘A-‘ to ‘A’ (long-term issuer default rating) and from ‘F1’ to
‘F1+’ (short-term issuer default rating). S&P also re-affirmed their ‘A-‘ long term issuer ratings for APRR, and both maintained their
outlook as ‘stable’.
As at year end, APRR had €1,534.6 million in cash on the balance sheet with a €2.0 billion undrawn revolving credit facility.
ATLAS ARTERIA ANNUAL REPORT 2022 | 39
ATLAS ARTERIA ANNUAL REPORT 2022 | 39
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS
FINANCIAL OVERVIEW
Warnow Tunnel
Warnow Tunnel 100%
Toll revenue
Other revenue
Total operating revenue
Operating expenses
Total EBITDA
2022
13.1
0.1
13.3
(4.1)
9.2
€m
2021
12.5
0.2
12.7
(4.0)
8.7
% change
5.2%
(42.1%)
4.5%
(2.0%)
5.6%
2022
19.9
0.2
20.1
(6.2)
13.9
A$m
2021
19.7
0.3
20.0
(6.3)
13.7
% change
1.2%
(41.1%)
0.6%
1.1%
1.4%
Traffic for the year at Warnow was 3.4% higher than 2021, benefitting from the relaxation of COVID-19 movement restrictions
and roadworks on competing routes. This was partially offset by summer traffic which was negatively impacted by the German
government’s temporary public transport pass (for more detail, see Warnow Tunnel on pages 16 and 17). Toll revenue for the year
was 5.2% higher than 2021.
Costs at Warnow Tunnel increased marginally by €0.1 million (2.0%).
EBITDA margins progressively improved from 2016 to 2018 in line with the strong increase in traffic and revenues. Warnow’s EBITDA
margins were impacted by COVID-19 movement restrictions in 2020 and 2021.
Warnow Tunnel EBITDA (excluding IFRIC 12)
76.8%
74.9%
75.3%
71.1%
68.3%
69.0%
80%
75%
70%
65%
2017
2018
2019
2020
2021
2022
Warnow Tunnel had $13.3 million (€8.4 million) cash as at 31 December 2022.
Chicago Skyway
The Chicago Skyway interest was acquired on 1 December 2022 and has been equity accounted in the ATLAX Group and Atlas Arteria
accounts from that date. The table below sets out an analysis of the full calendar year financial results of Chicago Skyway to provide
more complete information on underlying operational performance.
Chicago Skyway 100%
Toll revenue
Other revenue
Total revenue
Overhead expenses
Operating and maintenance expenses
Toll collection expenses
Total operating expenses
Total EBITDA
US$m
A$m
2022
120.1
0.0
120.1
(5.0)
(6.8)
(4.2)
(16.0)
104.2
2021
114.2
0.1
114.3
(5.0)
(5.9)
(3.9)
(14.9)
99.4
% change
5.1%
(95.5%)
5.1%
1.6%
(15.0%)
(5.5%)
(6.9%)
4.8%
2022
173.3
0.0
173.3
(7.2)
(9.9)
(6.0)
(23.0)
150.2
2021
152.2
0.1
152.3
(6.7)
(7.9)
(5.2)
(19.9)
132.4
% change
13.8%
(95.2%)
13.7%
(6.5%)
(24.5%)
(14.2%)
(15.7%)
13.5%
40 | ATLAS ARTERIA ANNUAL REPORT 2022
40 | ATLAS ARTERIA ANNUAL REPORT 2022
Traffic for the year at Chicago Skyway was 2.2% higher than 2021, and 9.1% higher than 2019 levels. Both light and heavy vehicle
traffic were positively impacted for part of 2022 by roadworks along the competing route on the Frank Borman Expressway. A steady
increase in office-based work in Chicago also positively impacted traffic (for more detail, see Chicago Skyway on pages 18 and 19).
Chicago Skyway Light Vehicle/Heavy Vehicle Traffic and Toll Revenue Split
t
i
l
p
S
c
fi
f
a
r
T
t
i
l
p
s
e
u
n
e
v
e
R
)
y
c
n
e
r
r
u
c
l
a
c
o
l
(
2022
2021
2020
2022
2021
2020
89%
90%
89%
62%
63%
60%
0%
20%
40%
60%
Light vehicle
Heavy vehicle
11%
10%
11%
38%
37%
40%
80%
100%
Operating costs increased by 6.9% compared to 2021 as a result of a number of factors including higher transaction costs in line with
increased traffic, wage escalation and higher insurance premiums.
2022 Operating costs
(based on US$ costs)
2021 Operating costs
(based on US$ costs)
26%
31%
26%
34%
Overhead expenses
O&M
Toll collection expenses
43%
40%
EBITDA margins were stable from 2016 to 2019, then in 2020 were impacted by the COVID-19 movement restrictions on traffic
and are slowly increasing towards pre-pandemic levels.
Chicago Skyway EBITDA margins (excluding IFRIC 12)
87.5%
87.7%
86.9%
86.7%
84.9%
84.1%
90%
85%
80%
2017
2018
2019
2020
2021
2022
Chicago Skyway had $77.8 million (US$52.8 million) cash at 31 December 2022.
ATLAS ARTERIA ANNUAL REPORT 2022 | 41
ATLAS ARTERIA ANNUAL REPORT 2022 | 41
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS
FINANCIAL OVERVIEW
Dulles Greenway
Dulles Greenway 100%
Toll revenue
Other revenue
Total revenue
Transaction fees
Operating and maintenance expenses
Other operating expenses
Total operating expenses
Total EBITDA
2022
67.1
0.9
68.0
(2.2)
(4.5)
(7.0)
(13.7)
54.3
US$m
2021
% change
59.9
0.5
60.4
(2.0)
(6.0)
(5.8)
(13.8)
46.6
12.0%
75.9%
12.6%
(8.7%)
24.4%
(20.8%)
0.6%
16.5%
2022
96.8
1.3
98.1
(3.2)
(6.5)
(10.1)
(19.8)
78.3
A$m
2021
% change
79.9
0.6
80.5
(2.7)
(8.0)
(7.7)
(18.4)
62.1
21.2%
111.5%
21.8%
(17.1%)
18.3%
(31.1%)
(7.6%)
26.1%
Traffic for the year at Dulles Greenway was 6.6% higher than 2021, but remained 30.8% lower than 2019 levels. Overall, return
to work traffic has been more gradual than expected, with people continuing to work from home. Towards the end of 2022, there
were more encouraging signs of recovery with the total number of trips in the fourth quarter the highest since the beginning of the
COVID-19 pandemic (for more detail, see Dulles Greenway on pages 20 and 21).
Operating costs decreased by 0.6% compared to 2021 as a result of the completion of the West End Project in January 2022
with no further spend and lower costs due to less severe snow conditions early in the year partially offset by higher transaction
costs in line with increased traffic, increases in property taxes and insurance, and costs associated with preparing for a rate case
submission to the SCC.
2022 operating costs
(based on US$ costs)
2021 operating costs
(based on US$ costs)
15%
16%
16%
15%
36%
19%
26%
14%
12%
Transaction fees
O&M
Property taxes
31%
Administrative expenses
Other
EBITDA margins were stable from 2016 to 2019, then in 2020 were impacted by the COVID-19 movement restrictions on traffic but are
slowly increasing towards pre-pandemic levels.
Dulles Greenway EBITDA (excluding IFRIC 12)
85%
80%
75%
70%
81.4%
81.3%
82.2%
79.8%
77.1%
73.8%
2017
2018
2019
2020
2021
2022
Dulles Greenway had $305.8 million (US$207.6 million) cash as at 31 December 2022. As previously disclosed, failure to pass the
lock-up tests as defined under the debt covenants for this business means that around US$62.5 million that would otherwise be
available for distribution to Atlas Arteria remains included as part of the cash reserves. In February 2023, US$11.6 million of cash
that would otherwise be available for distribution was drawn down in order to supplement debt service funds to ensure bond service
requirements were met.
42 | ATLAS ARTERIA ANNUAL REPORT 2022
42 | ATLAS ARTERIA ANNUAL REPORT 2022
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 2022. The information below also forms part of these Directors’ Reports:
– Strategic Framework on pages 10 to 11
– Business Performance on pages 12 to 21
– Sustainability on pages 22 to 27
– Risk Management on pages 28 to 30
– Information on the Directors, Company Secretaries and Directors’ meetings on pages 31 to 35
– Financial Overview on pages 36 to 42
– Remuneration Report on pages 48 to 69
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. 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 time, greater time certainty, reduced fuel consumption and
carbon emissions.
As of the date of this report, Atlas Arteria owned five businesses. The ATLIX Group has a 31.14% interest in the APRR toll road group
in France and 31.17% interest in ADELAC. Together APRR and ADELAC comprise a 2,406km motorway network located in the East
and South East of France. In the US, the ATLAX Group owns a 66.67% interest in the Chicago Skyway, a 12km toll road located south
of Chicago and Atlas Arteria has 100% of the economic interest in the Dulles Greenway, a 22km toll road in the Commonwealth of
Virginia, of which the ATLAX Group owns a 13.43% interest. In Germany, the ATLIX Group owns 100% of Warnow Tunnel, a 2km toll
road in the north-east city of Rostock.
Distributions
Distributions paid to securityholders were as follows:
Dividend of 20.0 cents per stapled security (cps) paid on 3 October 2022 (a)
Dividend of 20.5 cps paid on 31 March 2022 (b)
Dividend of 15.5 cps paid on 5 October 2021 (c)
Dividend of 13.0 cps paid on 9 April 2021 (d)
Total distributions paid
(a) The dividend paid on 3 October 2022 comprised of an ordinary dividend of 20.0 cps. The dividend was paid in full by ATLIX.
(b) The dividend paid on 31 March 2022 comprised of an ordinary dividend of 20.5 cps. The dividend was paid in full by ATLIX.
(c) The dividend paid on 5 October 2021 comprised of an ordinary dividend of 15.5 cps. The dividend was paid in full by ATLIX.
(d) The dividend paid on 9 April 2021 comprised of an ordinary dividend of 13.0 cps. The dividend was paid in full by ATLIX.
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
191,804
196,598
–
–
388,402
–
–
148,648
124,672
273,320
ATLAS ARTERIA ANNUAL REPORT 2022 | 43
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS DIRECTORS’ REPORTS
Review and results of operations
As a global owner and operator of toll roads, our business is to enable people to travel between destinations as safely, quickly,
and comfortably as possible.
During 2022, the improved operating environment led to a strong statutory net profit of $241.0 million as compared to $163.7 million
in 2021. The result reflects the strong traffic performance at APRR, partially offset by lower average value of the Euro, and improved
traffic performance at Dulles Greenway further enhanced by the strengthening of the US Dollar throughout the second
half of the year. The prior year results reflect the impact of Warnow Tunnel debt restructuring.
On 1 December 2022 the ATLAX Group completed the acquisition of a 66.67% majority interest in the Chicago Skyway.
The results for Chicago Skyway are accounted for under the equity method through the share of profit/(loss) for the period from
financial close of the Chicago Skyway acquisition on 1 December 2022 to 31 December 2022. The impact on the current year share
of profit/(loss) of equity accounted investments was a loss of $4.1 million. Offsetting the share of losses is the interest income on
the Calumet Concession Partners Inc (CCPI) shareholder loans of $1.7 million.
Further details regarding the performance of Atlas Arteria’s businesses can be found on pages 12 to 21, and further details
regarding the financial results of operations can be found in the Financial Overview section on pages 36 to 42.
Strategic Outlook
Atlas Arteria has strong organic growth potential within the current portfolio and continues to focus on improving the average
concession life at APRR, as well as creating a clear pathway to sustainable cash flows from the Dulles Greenway. These organic
growth opportunities, together with the task of transitioning ownership of the Chicago Skyway, are the focus of the business.
Importantly, the Chicago Skyway acquisition provides Atlas Arteria with the scale and additional balance sheet capacity to fund
organic growth opportunities including any potential re-tender of the APRR and AREA concessions.
Further details regarding Atlas Arteria’s operations and the results of those operations including likely developments in future years
can be found in the Our Business section on pages 12 to 21.
Sustainability
At Atlas Arteria, we are committed to playing a positive role in society and creating long-term value for our stakeholders. We focus
on embedding a culture in our business where all key decisions incorporate a sustainability lens.
Our strategy is informed by our four priority areas: safety; customers and community; our people; and environmental stewardship.
These four priorities are underpinned by business fundamentals that enable us to fulfil our future growth potential: good governance;
an ethical culture; an emphasis on sustainable growth; and keeping abreast of technology and other innovations.
Further details regarding Atlas Arteria’s approach to sustainability can be found on pages 22 to 27.
Risk Framework
Proactive and disciplined management of risk is critical to Atlas Arteria’s business strategy and organisational structure.
Identifying and prioritising risk is critical to the development and implementation of an effective strategy and, together with effective
risk management is essential to delivering value for our stakeholders. Atlas Arteria considers risk in conjunction with strategy, and
this approach is supported by a positive and proactive risk culture.
Further details regarding Atlas Arteria’s approach to risk management can be found on pages 28 to 30.
Significant changes in state of affairs
Acquisition of a 66.67% majority interest in Chicago Skyway funded by a $3,098 million equity raise
On 1 December 2022 the ATLAX Group acquired a 66.67% majority interest in CCPI which indirectly owns 100% of Skyway Concession
Company LLC, the concessionaire of the Chicago Skyway Toll Bridge (Chicago Skyway) connecting Chicago and Northwest Indiana.
This acquisition represented an equity value of US$2,013 million, which includes the shareholder loans acquired by the ATLIX Group.
The ATLAX Group’s equity investment in CCPI is classified as a joint venture and accounted for using the equity method. The ATLIX
Group’s shareholder loans are accounted for as financial assets at amortised cost.
In conjunction with the Chicago Skyway acquisition, on 14 September 2022 Atlas Arteria announced a fully underwritten 1 for 1.95
pro-rata accelerated non-renounceable entitlement offer of new stapled ALX securities to raise $3,098 million (the Equity Raise).
The Equity Raise resulted in the issuance of 491.8 million new fully paid ordinary stapled securities. The new stapled securities were
issued at a price of $6.30 per security with settlement of funds on 26 September 2022 for the institutional component and 13 October
for the retail component.
The proceeds of the Equity Raise were used to fund the Chicago Skyway acquisition.
44 | ATLAS ARTERIA ANNUAL REPORT 2022
Events occurring after balance sheet date
In February 2023, the ATLIX Group agreed to refinance the CCPI shareholder loans for the same nominal amount with an interest rate
of 7% per annum and maturity in February 2033. These loans will be reflected on the Atlas Arteria Statement of Financial Position as
a financial asset at amortised cost.
On 12 February 2023, the ATLAX Group agreed the final acquisition price with the sellers of the Chicago Skyway.
The Directors of ATLIX and ATLAX are not aware of any other matters or circumstances not otherwise dealt with in the Directors’
Reports that has significantly affected or may significantly affect the operations of the Groups, the results of those operations or the
state of affairs of the Groups in years subsequent to the year ended 31 December 2022.
Indemnification and insurance of officers and auditors
During the year, ATLIX and ATLAX each paid a premium in respect of a contract insuring the Directors and Officers of the Groups
against liabilities incurred in their capacity as Directors and Officers of the ATLAX Group and the ATLIX Group. This does not include
such liabilities that arise from conduct involving a wilful breach of duty by the Directors and Officers. The terms of the policies
prohibit disclosures of the details of the insurance cover and the premiums paid.
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 is responsible for adopting and maintaining its 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. The Boards are not aware of any material breaches during the reporting period.
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.
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 in Note 7.3 to the Financial Reports on page 106.
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.
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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 47.
Signed in accordance with a resolution of the Directors of Atlas Arteria International Limited:
Jeffrey Conyers
Chair
Atlas Arteria International Limited
Hamilton, Bermuda
22 February 2023
Caroline Foulger
Director
Atlas Arteria International Limited
Hamilton, Bermuda
22 February 2023
Signed in accordance with a resolution of the Directors of Atlas Arteria Limited:
Debra Goodin
Chair
Atlas Arteria Limited
Melbourne, Australia
23 February 2023
John Wigglesworth
Director
Atlas Arteria Limited
Melbourne, Australia
23 February 2023
46 | ATLAS ARTERIA ANNUAL REPORT 2022
Auditor’s Independence Declaration
As lead auditor for the audits of Atlas Arteria International Limited and Atlas Arteria Limited for the year
ended 31 December 2022, I declare that to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Atlas Arteria International Limited and the entities it controlled during
the period and Atlas Arteria Limited and the entities it controlled during the period.
Ben Gargett
Partner
PricewaterhouseCoopers
Melbourne
23 February 2023
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.
ATLAS ARTERIA ANNUAL REPORT 2022 | 47
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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 2022 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.
2022 was a year of consistent execution and business
transformation for Atlas Arteria.
Improving traffic (up 7.8% in 2022 on a weighted average basis)
following the relaxation of COVID-19 restrictions and increases
in toll revenue (up 9.0 % in 2022 on a weighted average basis)
drove strong financial performance. As a result, the Boards are
expecting to pay a record distribution of 40.0 cents per security
to our securityholders for the 2022 year, with the second half
2022 distribution expected to be supported by available excess
cash held on the balance sheet given the additional number of
securities on issue following the Chicago Skyway equity raise 1.
We have also provided guidance to distributions of 40.0 cents
per security for 2023 and consider that this is a sustainable
level moving forward1. Post-acquisition of the majority interest
in the Chicago Skyway, cash flows from our existing businesses,
including Chicago Skyway, are expected to provide for long-
term sustainable distributions.
Significant strategic milestones were achieved during the year
and recently in 2023. Our progress has been outlined in the
Strategic Framework section on pages 10 and 11, and included
the following:
– We doubled the weighted average concession life of the
business to 37 years2 through acquisition of a majority interest
in Chicago Skyway;
– The APRR network was expanded with the commencement
of tolling on the A79; and
– A €410 million Investment Plan was signed with the French
State providing additional toll increases at APRR and AREA.
During the period, good progress has also been made across
our sustainability priority areas: safety; our people; customers
and community and environmental stewardship. In particular,
this year the Boards have focused on the risks and opportunities
that climate change may pose to Atlas Arteria, and the initial
findings from this work are summarised in this document (see
pages 24 and 25) and will be expanded on in our Sustainability
Report to be published in April 2023. Atlas Arteria continues
to perform well in key benchmarks such as the GRESB
Infrastructure Public Disclosure Report, ranking second in the
Australia and New Zealand transport sector in 2022.
2022 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.
Our people are critical to our success and in 2022 we have
continued to focus on attracting, developing, and retaining
top talent as we have invested in the growth of our business.
We have evolved the way we support and care for our people
and are proud of the commitments we have made to wellbeing
programs and access to flexible working for all employees.
We continue to foster and build an engaged and inclusive
culture that provides the right environment for our diverse
talent to work together as a high performance team. We take
a transparent approach to changes we embed and hold
ourselves accountable for our commitments through the
use of diagnostic tools and employee feedback.
As a result of a traffic accident in April at APRR, an APRR
employee lost his life. While APRR is not under ALX direct
operational control, in view of the importance that we attach
to safety, the Boards have exercised discretion not to award
an STI outcome to the MD & CEO and the Executive Team for
safety performance (5% weighting).
1. Guidance remains subject to continued business performance, movements in foreign exchange rates, and other future events (including refinancing
at Chicago Skyway).
2. Weighted by Equity Value; Remaining concession life calculated as at 11 September 2022.
48 | ATLAS ARTERIA ANNUAL REPORT 2022
The awards will only vest where absolute TSR over the three
year performance period has been positive and the Boards
are satisfied that the business case for the acquisition of the
Chicago Skyway has been achieved. In the interests of
transparency, we are providing information on progress in
achieving the strategic LTI performance measures in this
Remuneration Report at section 6.3 with further information
to be provided in future years.
The remaining 50% of the 2022 LTI continued to be subject to
relative TSR with a positive absolute TSR gateway, assessed
over three years.
The Boards believe the combination of relative TSR and
strategic measures for the 2022 awards provided an
appropriate balance between driving forward strategic
projects while ensuring there was an ongoing focus on
creation of long-term value for securityholders. This
combination of measures provides a clear incentive to
secure commercial outcomes balanced with the incentive
to achieve superior securityholder returns relative to
comparator companies.
Enhanced disclosures of STI outcomes incorporating disclosure
of financial targets and performance against those targets were
adopted for the 2020 Report and further enhanced in 2021. This
focus on enhancing our disclosures of variable pay outcomes has
been well received by securityholders and continues this year.
Additional disclosures of threshold and stretch financial targets
together with commentary on the reasons for selection of the
performance measures and additional commentary on progress
against the targets during the year are also provided this year.
On balance, the Boards concluded that the outcomes for Atlas
Arteria’s STI for 2022 are appropriate and align with
securityholder outcomes and expectations.
The decisions implemented to align remuneration with
securityholder expectations more effectively during 2022 included:
Remuneration outcomes
– To ensure we continue to attract and retain a high performing
management team, fixed pay for executive KMP was reviewed
in 2022. This was the first review since 1 September 2020
for the MD & CEO, noting that he did not receive any increase
in fixed pay in 2021. Fixed pay increases are only provided
after completion of a robust remuneration benchmarking
review. Details of the outcome of the review are included
at section 6.1.
– Taking into account the exercise of discretion by the Boards,
the overall STI outcomes for the 2022 year are above target
and are reflective of the performance of the business and
management during the year.
– The 2020 Long Term Incentive (LTI) Award was tested
following the end of the performance period on 31 December
2022. The result was below threshold and hence the vesting
outcome was nil.
Remuneration structure
– Short Term Incentive Plan (STIP) – to ensure we continue to
meet securityholder expectations in managing ESG, an ESG
measure with a 10% weighting was introduced for 2022.
For 2022, our focus was on Lost Time Injury Frequency Rates
(LTIFR) safety targets and milestones towards Task Force on
Climate-Related Financial Disclosures (TFCD) implementation.
Delivery of our financial targets continues to be a priority
and consistent with market practice, the relative weighting
to financial performance is 60% of the total scorecard with
the balance of 40% applying to ESG (10%) and strategic
measures (30%).
Details of the STI outcomes for the year are included
at section 6.2.
– Long Term Incentive Plan (LTIP) – a second LTI measure was
introduced for the 2022 award equivalent to 50% of the LTI
value. The 2022 second LTI measure has a three year
performance period and will vest provided clearly quantifiable
improvements in securityholder value from the implementation
of two strategic activities are delivered to securityholders.
– Creating a clear pathway to sustainable cash flows from
Dulles Greenway;
– Improving the average concession life of the Atlas Arteria
portfolio.
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Enhancements to Remuneration Structure
and Disclosures
The Boards are continually looking for opportunities to improve
and evolve the 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.
The PRCs reviewed the remuneration strategy during the year
to ensure the remuneration framework remains consistent with
evolving business needs. Our objective is to adopt remuneration
practices which enable the remuneration framework to address
the business strategy more effectively, enhance alignment
of management outcomes to the delivery of superior returns
to securityholders and to reflect evolving market practices.
The outcomes of the review are:
– The Boards have decided that a pay freeze will apply to the
MD & CEO and the executive KMP for 2023 with the next
increases (other than any Luxembourg government mandated
increases that may apply for the COO) to occur no earlier than
1 January 2024.
– To retain the current STI level and structure which is
composed of financial performance objectives (60%), ESG
performance objectives (10%) and strategic performance
objectives (30%) with annual targets based on the business
priorities for the year. Awards are made in a combination of
cash (50%) and restricted securities (50%), and are deferred
for one year. The review found this approach is consistent
with market practices amongst peer companies.
– To revert to relative TSR with a positive TSR gateway as a
sole performance hurdle for awards under the 2023 LTI Plan.
Relative TSR has been selected as the sole performance
measure as it measures securityholder value creation
objectively, can be used for comparing performance across
different jurisdictions and is widely understood and accepted
by stakeholders. Further details are included at section 5.4.
In developing the proposed approach to the 2023 LTI, the
PRCs consulted with investors and their advisors in relation
to the proposed changes.
Securityholders will be asked to approve the equity based STI
and LTI awards for the MD & CEO at the 2023 AGM.
The remuneration framework will be reviewed again, based
on the expected needs of the business and evolving market
practice, during 2023 to develop the appropriate approach
for 2024 and subsequent years.
Non-executive Director Fees
It is not proposed to increase Non-executive Director fees in 2023.
Remuneration Governance
The PRCs are actively involved in ensuring our remuneration
policies and practices reflect Atlas Arteria’s values and STEER
principles (see page 2) and encourage appropriate behaviours
and actions which are aligned with Atlas Arteria’s business
strategy, performance and securityholder interests.
Specifically, the PRCs seek to ensure management behaviours
are consistent with the creation of value for securityholders, our
commitments to safety, our people, environmental stewardship,
customers and communities. Activities undertaken by the
PRCs during the year were focussed on enhancing our formal,
rigorous and transparent HR and remuneration framework.
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 executive KMP. The
PRCs provide regular informal feedback on performance to the
MD & CEO in relation to both the MD & CEO and executive KMP.
At the end of the financial year, the MD & CEO and each of the
executive KMP have their performance assessed against these
KPIs and other relevant matters. The formal performance
review process has been completed for 2022. More information
in relation to the outcomes of the process for the executive KMP
can be found at section 6.2.
We trust you, our securityholders, find the 2022 Remuneration
Report provides clear and informative insights into our
remuneration policies, practices and outcomes.
David Bartholomew
Fiona Beck
Atlas Arteria Limited
Atlas Arteria International Limited
People & Remuneration
Committee Chair
People & Remuneration
Committee Chair
50 | ATLAS ARTERIA ANNUAL REPORT 2022
This Remuneration Report contains the following sections:
1 Introduction
2 Who is covered by this report?
3 Overview of the remuneration framework
4 2022 business performance highlights
5 Remuneration framework
6 2022 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 2022. 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 securityholding 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
David Collins
Managing Director & Chief Executive Officer
Chief Financial Officer
Vincent Portal-Barrault
Chief Operating Officer
Nadine Lennie 1
Chief Financial Officer
Non-executive Directors
Debra Goodin 2
Independent Non-executive Chair (ATLAX) and
Independent Non-executive Director (ATLIX)
Ariane Barker 3
Independent Non-executive Director (ATLAX)
David Bartholomew
Jean-Georges Malcor 4
Independent Non-executive Director (ATLAX)
People and Remuneration Committee (PRC) Chair
Independent Non-executive Director (ATLAX)
Audit and Risk Committee (ARC) Chair
1 April 2019
30 August 2022
1 April 2019
1 April 2019 (Ceased with effect from 31 March 2022)
1 November 2020 as Chair of ATLAX
(Director of ATLAX from 1 September 2017)
and Director of ATLIX from 1 November 2020
1 March 2021
Audit and Risk Committee (ARC) Chair from
1 March 2021 to 30 June 2022
1 October 2018
1 November 2018
ARC Chair with effect from 1 November 2020
until 1 March 2021 and from 1 July 2022
to 31 December 2022
Jeffrey Conyers
Fiona Beck
Andrew Cook
Caroline Foulger
Independent Non-executive Chair (ATLIX)
16 December 2009
Independent Non-executive Director (ATLIX)
People and Remuneration Committee (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
1. On 17 January 2022 it was announced that Nadine Lennie would be stepping down from her role as Chief Financial Officer and leaving the organisation
with effect from 31 March 2022. Details of Ms Lennie’s termination arrangements are included in the table at section 9.
2. As contemplated by the Co-operation Deed in place between ATLAX and ATLIX, the ATLIX Board includes a Director of ATLAX (Debra Goodin) to facilitate
and promote co-operation and consultation between the two Boards.
3. On 20 December 2022 it was announced that Ariane Barker would retire as a Director of ATLAX with effect from 31 December 2022.
4. ARC Chair at 31 December 2022.
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3 Overview of the remuneration framework
Included below is a summary of the 2022 remuneration framework for the Executive Team. Further details regarding our
remuneration arrangements are provided in the remainder of this Remuneration Report.
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 benefits 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.
Safety is at
our heart
Transparency
in all we do
Engage for
better outcomes
Environmentally and
socially responsible
Respect in every
interaction
Executive Remuneration Framework Overview
Remuneration
Principles
Simple
Balance short and long-term needs
Maintain contemporary and
competitive practices
Reflect our values and behaviours
Specific and differentiated
performance outcomes
Securityholder alignment
Short Term Incentive
Annual incentive delivered 50% in
cash and 50% in restricted securities
Long Term Incentive
Annual award of performance rights
with a 3 year performance period
Remuneration
elements
Purpose
How aligned to
performance
Performance
measures
Fixed Remuneration
Salary and superannuation
Reviewed annually against
comparator benchmarks
Executive remuneration levels
should be competitive with
companies of similar size
and complexity
To align the interests of
securityholders, executives and
other participants as determined
by the Boards
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 60%),
ESG (10%) and non-financial strategic
measures (30%) with challenging
targets set by the Boards based on
the business priorities for the year
Rewards long-term value creation
for securityholders
Vesting based on achieving
challenging performance targets
Relative total securityholder return
(TSR) compared to a comparator
group of local and international
infrastructure companies
For 2022 only, a strategic measure
was introduced with vesting based
on demonstrated delivery of
securityholder returns
A positive TSR gateway applies
before vesting occurs
Performance
targets
Alignment to
securityholders
Governance
Measures are set to reward
delivery of returns and value
creation for securityholders
Minimum securityholding
requirements to be accumulated
within five years
Measures are set to reward delivery
of returns and value creation for
securityholders
Measures performance
against local and international
infrastructure companies
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
52 | ATLAS ARTERIA ANNUAL REPORT 2022
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 which were
reviewed by the PRCs during the year provide guidance on how remuneration decisions are made and how remuneration outcomes
are determined.
The executive remuneration framework should be: Description
Simple
Be simple to understand, implement and communicate
Balance short and long-term needs
Maintain contemporary and
competitive practices
Reflect our values and behaviours
Specific and differentiated
performance outcomes
Securityholder alignment
Align the interests of our people and our company by ensuring a clear link between
remuneration and both short and long-term business performance
Use market competitive and contemporary practices to ensure we can attract, retain,
and motivate the right talent
Align reward with demonstrated behaviours and actions consistent with our STEER
principles, business priorities and stakeholder expectations
Support a high-performance culture with specific performance measures for individual
employees they can influence
Encourage equity ownership so that employees have ‘skin in the game,’ aligning
individuals to securityholder returns
What decisions have been made regarding the remuneration structure during 2022 and why?
Decisions made by the Boards in relation to the remuneration structure during the year were:
– To retain the current STI level and structure which is composed of financial performance objectives (60%), ESG performance
objectives (10%) and strategic performance objectives (30%) with annual targets based on the business priorities for the year.
Awards are made in a combination of cash (50%) and restricted securities (50%), and are deferred for one year. The review found
this approach is consistent with market practices amongst peer companies.
– To revert to relative TSR with a positive TSR gateway as a sole performance hurdle for awards under the 2023 LTI Plan. Following
the acquisition of the Chicago Skyway and the increase in weighted average concession life, the Boards consider relative TSR is
the most appropriate measure to assess the returns to be delivered to securityholders in particular from the Chicago Skyway
performance, future extensions to the APRR concession and that there are sustainable cash flows from the Dulles Greenway.
Relative TSR has also been selected as it measures securityholder value creation objectively, can be used for comparing
performance across different jurisdictions and is widely understood and accepted by stakeholders.
Vesting of awards is also subject to continued service and demonstration of the STEER principles throughout the performance period.
In developing the proposed approach to the 2023 LTI, the PRCs consulted with investors and their advisors in relation to the
proposed changes. Further details are included at section 5.4.
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.
Variable remuneration comprises both short and long-term performance components:
1. The STI for 2022 was based on an assessment of performance against a balanced scorecard of financial measures (weighted
60%), ESG (10%), and non-financial strategic measures (30%) linked to key financial and business objectives. For further
information regarding the performance outcomes and STI structure for the MD & CEO and the executive KMP, see section 6.2.
2. For the Long Term Incentive component, Atlas Arteria’s 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 2022), performance
measure, relative TSR comparator group constituents and vesting schedule, see section 5.4.
Information on our remuneration governance provisions such as clawback, malus, treatment of awards on cessation of employment
and change of control are provided in section 8.
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 most recent assessment date and pro-rated for time.
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4 2022 business performance highlights
4.1 Overview of business performance
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 and 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 2022 that underpin the
STI and LTI plans.
Distribution Payments per Security ($) 1
Cash flow per security ($) 2
EBITDA proportionate ($m) 3
Share price (@year end) ($) 4
Total Security Return
STI awarded as a % of maximum – CEO 5
LTI vested as a % of max – CEO 6
2022
0.405
0.42
1,100.8
6.61
8.7%
80%
2021
0.285
0.30
1,024.4
6.47
11.5%
84%
Nil vesting
Nil vesting
2020
0.11
0.31
884.0
6.07
(15.5%)
26%
N/A
2019
0.30
0.27
923.0
7.32
32.2%
100%
N/A
2018
0.24
0.26
869.4
5.76
3.4%
70%
N/A
1. Distributions paid to securityholders during the year.
2. Cash flow per security calculated by reference to the securities on issue at the time the cash flows were received by the business.
3. Proportionate EBITDA from each business as reported for each financial year on a consistent currency basis, excluding Chicago Skyway.
4. Atlas Arteria TERP adjusted security price as at year end.
5. Relates to the year for which the STI was awarded.
6. Relates to the final year of the LTI performance period, that is the year the LTI may have vested.
ALX security price (2010-2023)
$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
2021
2022
2023
54 | ATLAS ARTERIA ANNUAL REPORT 2022
5 Remuneration framework
5.1 Positioning and mix of executive remuneration
The remuneration framework for the Executive Team aims to achieve balance between:
– Fixed and performance-based remuneration;
– Short and long term performance incentives;
– Financial, non-financial and strategic outcomes; and
– Remuneration delivered in cash and equity.
To ensure our remuneration quantum and structure is market competitive, reference is made to the median of a group of ASX
listed 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 together with the timeframe over which the different elements of the framework are
delivered for the MD & CEO and the executive KMP are represented in the graphs below.
Remuneration Mix
O
E
C
&
D
M
s
e
v
i
t
u
c
e
x
e
P
M
K
At target
Fixed 34%
Short term incentive 33%
Cash 16.5%
Equity 16.5%
Long term incentive 33%
At maximum
Fixed 29%
Short term incentive 42%
Cash 21%
Equity 21%
Long term incentive 29%
At target
Fixed 44%
Short term incentive 26%
Cash 13% Equity 13%
Long term incentive 30%
At maximum
Fixed 39%
Short term incentive 34%
Cash 17%
Equity 17%
Long term incentive 27%
Remuneration Delivery
Fixed pay Payable monthly in cash and superannuation
Short term incentive
50% payable in cash after 12 months
50% payable in deferred equity after 24 months
Long term incentive
Performance rights subject to 3 year performance period
Year 1
Year 2
Year 3
Subject to minimum securityholding requirement
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.
The PRCs have selected (and reviewed as appropriate) a peer group of ASX listed companies for the purposes of benchmarking both
fixed and variable remuneration for the Australian based executives. The peer group reflects the size and complexity of Atlas Arteria
and includes companies with significant international operations, similar scale and scope of business and market capitalisation.
The peer group is not solely based on market capitalisation, as the PRCs believe this would lead to inappropriate remuneration
outcomes and distortions in remuneration levels that are not reflective of the scale and complexity of our business. A similar
approach is adopted based on European and US companies for European and US based executives.
Securityholders were advised in the 2021 Report, that the Boards would undertake a review of fixed pay during 2022 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.
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REMUNERATION REPORT
5.3 Short Term Incentive Plan
Details regarding the STI arrangements for the executive KMP 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 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 other executive KMP.
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 securityholding requirement,
50% of the STI outcome is normally deferred into restricted securities for a one year period following the
conclusion of the performance period, with vesting subject to ongoing service and the discretion of the Boards.
STI targets set for 2022 comprised a combination of financial measures, ESG measures and non-financial
measures relating to specific strategic outcomes and taking account of culture and behaviours.
STI weighting – financial
and non-financial
measures
The Boards believe delivering strong financial performance for our securityholders continues to be a priority.
Accordingly, the financial component of the STI scorecard has a 60% weighting with the remaining 40% applying
to strategic (30%) and ESG (10%) measures. This combination of measures is consistent with market practices
amongst peer companies.
ESG measures
An ESG measure with a 10% weighting was introduced to the STI Plan in 2022. Inclusion of an ESG measure
reflects our commitment to safety, the environment, our people, and our focus on customers and communities.
We established corporate KPIs across our four sustainability pillars which were published in our Sustainability
Report. Remuneration objectives tied to these corporate objectives are set annually and reflect the priorities
for the year ahead where we believe we can make quantifiable improvements. For 2022, our focus was on
safety (LTIFR) and TFCD (implementation milestones).
5.4 Long Term Incentive Plan
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 executive KMP 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 performance against the relevant performance measures over the three year performance period. These measures
include TSR performance relative to a group of Australian and international peer companies and other measures if selected by the
Boards to address specific strategic priorities from time to time (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.
56 | ATLAS ARTERIA ANNUAL REPORT 2022
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 other executive KMP. The number of awards granted is based on face value and
is determined based on the 10 day volume weighted average security price (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 normally assessed solely against relative TSR. Relative TSR has been selected as a
performance measure as it measures securityholding value creation objectively, can be used for comparing
performance across different jurisdictions and is widely understood and accepted by stakeholders.
As a one off measure, for the 2022 grant, a second LTI performance hurdle (equal to 50% of the LTI award
value) was introduced with vesting based on quantifiable improvements in securityholder value from the
successful delivery of key strategic objectives (refer to section 6.3 for information on progress against the
strategic objectives).
– Creating a clear pathway to distributions from Dulles Greenway;
– Improving the average concession life of the Atlas Arteria portfolio.
Vesting of the remaining 50% of the 2022 LTI award is subject to the same relative TSR measure as applied
for previous years.
Relative TSR with a positive TSR gateway as a sole performance hurdle is being reintroduced for awards
under the 2023 LTI Plan. Relative TSR has been selected as the sole performance measure as it measures
securityholder value creation objectively, can be used for comparing performance across different jurisdictions
and is widely understood and accepted by stakeholders.
From 2020, Atlas Arteria’s TSR performance has been assessed against a group of approximately 125 OECD-
domiciled companies that are included in the Global Listed Infrastructure Organisation (GLIO) index at the start
of the performance period.
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.
A VWAP over a 40 business day period prior to the start of a performance period and a 40 business day
period to the end of the respective performance period is used for the calculation of TSR performance for the
2020 and subsequent awards. 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.
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.
Awards which have strategic LTI measures will vest based on actual performance with 50% of the award
vesting for the minimum acceptable performance and 100% of the award only vesting where challenging
performance outcomes are achieved. Details of the quantifiable outcomes will be disclosed in the Remuneration
Report for the year of vesting.
A positive TSR hurdle was introduced for the 2021 and subsequent LTI awards which applies in addition to the
actual performance hurdles – relative TSR or strategic. Thus, irrespective of the relative TSR performance or
performance against the strategic outcomes, no awards under the LTI will vest unless absolute TSR for the
performance period is positive.
Performance is measured over a three year performance period, from 1 January to 31 December. A three year
performance period is consistent with market practice amongst peer companies. The performance for the 2022
grant will be assessed at the start of 2025 and measured from 1 January 2022 to 31 December 2024.
Positive TSR Hurdle
Performance period
Vesting and allocation
of securities
If and when the Boards determine that the performance measures have been achieved, the performance rights
will automatically be exercised provided absolute TSR has been positive, 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. The Board believes it improves alignment of
management with securityholders, where the investment proposition is based on both yield and growth in
security price.
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Proposed changes to the remuneration framework for 2023
As a result of the outcome of the remuneration strategy review during the year, the Boards have decided to revert to relative
TSR with a positive TSR gateway as a sole performance hurdle for awards under the 2023 LTI Plan. Following the acquisition
of the Chicago Skyway and the increase in average concession life, the Boards consider relative TSR is the most appropriate
measure to assess the returns to be delivered to securityholders from business performance and in particular the Chicago
Skyway performance, future extensions to the APRR concession and sustainable cash flows from the Dulles Greenway.
Relative TSR also measures securityholder value creation objectively, can be used for comparing performance across different
jurisdictions and is widely understood and accepted by stakeholders.
Vesting of awards is also subject to continued service and demonstration of the STEER principles throughout the performance period.
5.5 Approval of MD & CEO Equity Based Awards
Securityholders will be asked to approve the following equity based awards for the MD & CEO at the 2023 AGM:
– The equity component of the 2022 STI award in the form of restricted securities for one year equal to 50% of the STI awarded
for 2022;
– An additional LTI award for 2022 to the value of $100,000 to reflect the increase in the value of LTI following his 2022 remuneration
review. It is proposed that this award will be granted on the same basis as the awards previously approved by securityholders
at the 2022 AGM; and
– The 2023 LTI award in the form of performance rights with vesting subject to relative TSR and positive TSR performance hurdles.
5.6 Employee Equity Incentive Plan
The Groups operate an employee equity plan to enable all corporate employees to become securityholders. The plan was
introduced in 2020 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, are eligible to participate in the plan. Awards to the value of
$5,000 were made in the form of share rights with vesting subject to a 3 year service condition. The total value of the equity
awarded in 2022 was in the order of $110,000.
5.7 Employment contracts
The remuneration and other terms of employment for the executive KMP are formalised in executive contracts. Key contractual
terms in place for 2022 are outlined below.
MD & CEO
CFO
COO
Contract type
Ongoing
Ongoing
Ongoing
Termination notice
by either party
Termination notice
with cause
Termination notice by KMP
for fundamental change in role
12 months
6 months
6 months
Immediate without
notice period
Immediate without
notice period
Immediate without
notice period
30 days within 21 days
of fundamental change
30 days within 21 days
of fundamental change
During the year, the Boards provided confirmation to the CFO and COO that in the event of a change in control they would receive a
payment equal to 6 months fixed pay (as Atlas Arteria’s executive employment contracts do not provide for payments on termination
of employment other than for notice), a pro rata payment under the short term incentive plan for the period of employment paid out
at maximum and awards made under the long term incentive plan will vest in accordance with plan rules and will be paid in cash.
Entitlement to a payment is conditional on ongoing employment and no payment will arise where either party provides the other
party with notice of termination prior to the payment date. The arrangements will cease to have effect on 31 December 2023 if there
has been no change of control.
These arrangements do not apply to the MD & CEO and the terms of the various plans will apply in the event of a change of control.
Accordingly, in the event of a change of control the following will apply:
– Mr Bevans will be provided with 12 months’ notice of termination of employment or a payment of fixed pay in lieu of notice for any
period of time not worked where there is a fundamental change to his role.
– The Boards have absolute discretion to determine the treatment of STI awards where there is a change of control and in the event
that they do not exercise discretion, 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.
– The Boards have discretion to determine the treatment of LTI 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.
58 | ATLAS ARTERIA ANNUAL REPORT 2022
6 2022 Remuneration outcomes
6.1 Fixed pay
It is important to retain our key people and we recognise this is increasingly challenging in the current market for talent. Fostering
the right organisational culture with a strong employee value proposition is critical to retention. We also recognise that the best
retention mechanism is to provide challenging work, create opportunities for development, to reward achievement against
challenging goals and to ensure our people are remunerated competitively against market.
Securityholders were advised in the 2021 Remuneration Report that, following a pay freeze in 2021, the Boards would review
executive remuneration during 2022 to ensure our remuneration levels are competitive with companies of similar size and
complexity. Executive remuneration levels had previously been determined in 2020, which were the first increases since the
time of appointment in 2018.
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. The Boards are cognisant of the importance
of ensuring market competitive fixed remuneration for executive KMP. We monitor and review remuneration annually with regard
to economic indicators, market movements and talent attraction and retention challenges. Generally, we have not passed on fixed
pay increases to executive KMP each year, rather, these have been limited to individual market-based adjustments, changes in the
scope of roles or increases reflecting sustained high performance.
This year, 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 the market.
As a result of the review, taking into account the scope of each role, the experience and capability of each executive relative to
peers, the following fixed remuneration levels took effect:
– MD & CEO – an increase in annual fixed remuneration from $1,300,000 to $1,400,000 with effect from 1 January 2022.
– CFO – Annual fixed remuneration was determined at $645,000 on appointment – 30 August 2022.
– COO – As a result of a Luxembourg government compulsory CPI review on 1 April 2022, his fixed remuneration increased from
€444,850 to €455,971.
The Boards have decided that a pay freeze will apply to the MD & CEO and the executive KMP for 2023 with the next increases
(other than any Luxembourg government mandated increases that may apply for the COO) to occur no earlier than 1 January 2024.
6.2 Short term Incentive Plan
STI performance in respect of 2022 was assessed based on a combination of financial, ESG and non-financial measures. These
measures were determined at the start of the 2022 financial year based on the structure of the Atlas Arteria business at that time.
For 2023, the measures will include the activities of the Chicago Skyway with appropriate financial targets and other performance
measures to reflect all of Atlas Arteria’s operations.
Details of the 2022 STI awards for executive KMP are set out below.
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6.2.1 MD & CEO
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 Boards may exercise discretion to adjust the actual STI awarded upwards where these
expectations have been exceeded or adjusted downwards where the expectations are not met. This year the Boards decided to
exercise a positive discretion (15% from a potential 45%) to increase the MD & CEO’s STI award to 120% of target (80% of maximum)
in recognition of the leadership, stewardship and governance consistently demonstrated by Mr Bevans through a transformative
and complex year for the business.
Performance area
and description
Proportional adjusted
EBITDA (reflecting
proportional
performance of
each business at
constant exchange
rates and excludes
corporate costs
and Board approved
special projects)
Free cash flow
received from
Operations (at
constant exchange
rates and excludes
corporate costs
and Board approved
special projects)
Distributions
of $0.40 per
security1
Corporate operational
expenditure
(excluding costs
of STIs and LTIs,
Board approved
special projects
and at constant
exchange rates)
Total financials
ESG targets – safety
Meet Corporate
safety targets and
Continue to
professionalise safety
processes within
controlled businesses
ESG targets
Implementation of
2022 TCFD ‘road
map’ requirements
against each of the
4 TCFD pillars
Weighting Threshold Target
Stretch
Result
Reason chosen
Performance assessment
16%
$1,085
(~95%
of target)
$1,145m $1,200
$1,145m Proportional adjusted
(~105%
of target)
EBITDA reflects the
performance of the
underlying operations
of the business and has
been adopted to focus
the MD & CEO and the
other executive KMP on
the delivery of the annual
earnings targets.
Improved traffic (up 7.8% in 2022)
following the relaxation of COVID-19
restrictions and increases in toll
revenue (up 9.0% in 2022) drove a
target result for financial performance.
16%
$400m
(~95%
of target)
$420m $440m
$418m Free cash flow from
(~105%
of target)
Operations recognises
the importance in the
generation of continuous
cash flow to support
distribution growth.
The strong financial performance of
APRR and Warnow Tunnel resulted in
an increase in cash flows during 2022
of $136m to $418m (2021 $283m) to
Atlas Arteria. The result was slightly
below target.
16%
–
$0.40
–
$0.405 Growth in distributions
is closely aligned with
investor expectations and
encourages management
to deliver increasing
returns to securityholders.
Distributions paid during the year were
slightly above target increasing to a
record distribution of 40.5 cents per
security compared to 28.5 cents per
security paid during 2021.
12%
$34 m
(~105%
of target)
$32m $30m
$30m Focuses management
(~95%
of target)
on the importance of
making operational
improvements and
delivery of cost savings.
Corporate costs were effectively
managed with a stretch outcome
achieved.
60%
5%
65%
Progress to plan as assessed
by the Boards
0%
5%
Progress to plan as assessed
by the Boards
5%
Whether working
or travelling with us,
safety is our primary
focus, and we pursue
a zero-harm culture.
There is increasing
expectation amongst
regulators and investors
that organisations
align their actions and
disclosures to TCFD
recommendations.
Alignment requires input
and action from across the
businesses, to effectively
integrate consideration
of climate-related issues
into business processes,
including risk, strategy
and financial planning.
While the targets against individual
measures were largely achieved
during the year, due to the fatality
of an APRR employee the Boards
exercised discretion not to award
an STI outcome to the MD & CEO
and the Executive Team for
safety performance.
Set up clear roles and responsibilities
to assess and manage climate-related
issues with regular reporting to
the Boards.
Completed qualitative and quantitative
scenario analysis to identify assess
climate-related risks and opportunities
and associated impacts. Integrating
into Risk Management processes.
TCFD-aligned disclosures being
included in reporting suite (Annual
and Sustainability Reports and
Corporate Governance Statement),
including reporting on Scope 1 and 2
emissions and associated targets.
Establishment of Scope 3
emissions for corporate and
wholly owned businesses.
1. Assessed based on distributions payable for the 2021 second half and the 2022 first half.
60 | ATLAS ARTERIA ANNUAL REPORT 2022
Performance area
and description
Corporate
development and
M&A activity
Pursue and achieve
clear progress on
opportunities for
growth that meet our
strategic objectives
Weighting Threshold Target
Stretch
Result
Reason chosen
Performance assessment
10%
Progress to plan as assessed
by the Boards
10%
To deliver projects that
achieve accretive long
term value for ALX
securityholders.
APRR network extended with
ownership of the A79 finalised.
Working with Eiffage and APRR
achieved €410m investment plan
in January 2023.
Acquisition of Chicago Skyway is
value accretive (given it is expected
to deliver an internal rate of return
exceeding our risk-adjusted cost of
equity at the time of the acquisition),
it doubles Atlas Arteria’s weighted
average concession life, and,
together with cashflows from existing
businesses, it is expected to provide
for long-term sustainable distributions.
10%
10%
Strategy
Develop and deliver
an agreed strategy
Team Development
Focusing on
leadership capability,
and employee
engagement
Total non-financials
40%
100%
Total financials/
non financials
Discretionary
adjustment
Total award
as a % of Target
Progress to plan as assessed
by the Boards
15%
Progress to plan as assessed
by the Boards
10%
40%
105%
15%
120%
Enable a rigorous
informed review and
establish a clear strategic
focus for the business.
Board approval for strategic plan
for the business developed and
demonstrated clear progress
on the implementation plan.
Focuses on the continued
development of people
capability, leadership and
engagement to support
the implementation of
strategy and growth
of the business.
Redesign of leadership program
completed with a focus on embedding
the fundamentals of leadership.
Positive change in behaviour exhibited.
Employee engagement – embedded
consistent model/approach across
the business resulting in a 10%
increase in the engagement score.
Expanded leadership team in place
and is working well together.
The Boards have exercised discretion to adjust Mr Bevan’s STI
outcome by 15% out of a maximum discretionary opportunity
of 45% in recognition of his contribution to the following:
– The negotiation and execution of the Chicago Skyway transaction;
– Leadership and judgment, strong communication with the Boards
and relationship management of significant events during a
transformational year; and
– The increasing maturity of the organisation and Executive Team.
6.2.2 Other executive KMP
The MD & CEO’s STI objectives, both financial and non-financial, for 2022 were cascaded to the other executive KMP being the
CFO and COO and were included within their specific personal and team objectives for the year. Their STI outcomes were assessed
on a consistent basis with that of the MD & CEO.
6.2.3 Executive KMP STI outcomes
Based on the performance achievement assessments described above, the following STI awards were made in respect of
achievements relating to 2022.
Name
Graeme Bevans
David Collins
Vincent Portal-Barrault
Nadine Lennie
% of maximum
achieved
Value – cash
$
Value – equity
$
STI forfeited
$
80%
73%
87%
61%
840,000
70,950
269,847
95,424
840,000
70,950
269,847
–
420,000
51,600
83,030
64,326
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6.3 Long term Incentive Plan
The relative TSR hurdle for the 2020 LTI award was tested following the end of the performance period on 31 December 2022.
The result (an absolute TSR of 7.08%) was at the 43rd percentile of the comparator group which was below threshold and hence
the vesting outcome was nil.
The following table summarises the relative TSR performance of the various grants of LTI awards since the time of appointment
of the internal management team in 2018:
When tested
Vesting outcome/projected vesting outcome
based on performance to date
2022
2021
2020
2019
2018
Will be tested
on 31.12.2024
Will be tested
on 31.12.2023
31.12.2022
31.12.2021
31.12.2020
100%
100%
Nil
Nil
Nil
Strategic LTI measures
Following the introduction of strategic measures for the 2022 LTI, we are providing a progress update below on performance
during 2022 in the interests of transparency. The strategic measures were selected as the Boards believe delivery of these
initiatives is fundamental to creating long-term value for securityholders.
Strategic Measure
Description
Key achievements in 2022
Dulles Greenway
Creating a clear
pathway to
distributions from
Dulles Greenway
– Political and stakeholder engagement continued during the period with the objective
of delivering a more effective tolling regime at the Dulles Greenway.
– In February 2023, legislation will be considered by the Virginia General Assembly
which would authorise the Department of Transportation to negotiate the potential
implementation of distance-based tolling on the Dulles Greenway.
Average portfolio
concession length
Improving the
average concession
life of the Atlas
Arteria portfolio
– A move to distance-based tolling is a critical step in the process of returning the Dulles
Greenway to an investment grade credit rating, allowing the Dulles Greenway to come out of
lock up and achieving distributions from the business that can be passed onto securityholders.
– Atlas Arteria’s average concession life was improved during the year with the addition
of two roads.
– The A79 was added to the APRR Group during the period with the ownership finalised in
June 2022 and tolling commencing in November 2022. The A79 is an 88km road in France
with a 48 year concession (45 years remaining).
– A majority interest was acquired in the Chicago Skyway with the acquisition completing
in December 2022. The Chicago Skyway is a 12.5km toll road in Chicago with a 99 year
concession (81 years remaining).
– In addition, there was continued dialogue with the French Government on achieving their
road development and ESG objectives in return for concession extensions.
Awards will only vest where:
– Quantifiable returns to securityholders from delivery of the strategic measures including the business case for the acquisition of the
Chicago Skyway can be demonstrated; and
– Absolute TSR over the performance period has been positive.
The Boards will retain full discretion over vesting on being satisfied that the strategic objectives have been met based on clearly
identifiable quantifiable outcomes that improve securityholder value. Factors the Boards will consider when determining the vesting
outcomes will include progress against approved business plans and investment projections, cash flows, security price performance
and returns delivered to securityholders. Full disclosure of the basis on which the vesting decisions were made will be provided
to securityholders at the time of potential vesting.
62 | ATLAS ARTERIA ANNUAL REPORT 2022
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.
Non-executive Director fees were last reviewed in 2021. The review was conducted by comparing Atlas Arteria’s NED fee levels
with those of a group of comparable ASX listed companies selected on the basis of similar businesses, scale of operation and
skill requirements. The review highlighted that the ATLAX NED fees were below the median level for companies of similar size
and complexity.
In addition, the review highlighted that the significant disparity between ATLIX and ATLAX Director fees was not reasonable given
that the responsibilities and workload of ATLIX Directors are comparable to ATLAX Directors. As a result, it was decided to adjust
ATLAX Director fees to be closer to, but just below the median for the comparator group and to set ATLIX Director fees closer to
parity with ATLAX.
The composition of the ATLAX Chair’s remuneration as between ATLIX and ATLAX Board memberships was altered, but her
aggregate remuneration only changed marginally. Also, no material changes to the Committee fees were made with ATLAX
Committee fees remaining the same and rounding adjustments being made to the ATLIX Committee fees. As referred to on page 3
of our Corporate Governance Statement, once the current ATLIX Board succession process is complete, it will reduce from five
to four Directors, resulting in a reduction in total fees, offsetting these increases.
The fees paid during 2022 are set out below:
Fees
Board
Audit and Risk Committee
Remuneration Committee
Nominations and Governance Committee
ATLAX
ATLIX
Chair (AUD) Member (AUD)
Chair (US $) Member (USD) Member (USD) 1
$310,000 2
$155,000
$220,000 2
$110,000
$55,000
$30,000
$30,000
Nil
$15,000
$15,000
Nil
$20,000
$20,000
Nil
$10,000
$10,000
Nil
Nil
Nil
Nil
1. For Australian based Director.
2. Committee fees are not payable to the Chairs of the ATLAX or ATLIX Boards.
Non-executive Directors are also entitled to receive a travel fee of A$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 performance rights or securities or to retirement benefits as part
of their remuneration package.
7.2 2023 Non-executive Director fees
There will be no increase in Non-executive Director fees for 2023.
NED fee arrangements will be reviewed during 2023 with any adjustments to occur no earlier than 1 January 2024.
7.3 Aggregate fee pool
As approved by securityholders at the 2019 AGM, the aggregate ATLAX Non-executive Director fee pool is capped at A$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 and executive KMP.
The Boards
People & Remuneration Committees Management
External advisors
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.
Approve remuneration strategy
and approve recommendations
from the PRCs.
The Boards approve the
quantum of remuneration for
Non-executive Directors and
the MD & CEO.
The PRCs consist
entirely of independent
Non-executive Directors.
Make recommendations
to the Boards regarding the
remuneration framework,
policies and practices for
Atlas Arteria.
The PRCs approve the quantum
of remuneration for other
executive KMP.
8.2 PRCs activities during 2022
The PRCs are actively engaged in ensuring our remuneration and people programmes are contemporary and working as intended.
The activities of the PRCs during 2022 included:
– Recommending the STI outcomes for 2021 to the Boards.
– Recommending the STI objectives for 2022, including recommending approval of the financial targets to the Boards.
– Monitoring progress against the 2022 STI targets.
– Reviewing the remuneration of the MD & CEO, the terms of appointment of the incoming CFO, separation arrangements for the
previous CFO, and remuneration arrangements for other executives as required.
– Engaging remuneration consultants to provide market remuneration data to assist with the review of executive remuneration.
– 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.
– Reviewing and approving changes to the Atlas Arteria remuneration principles to better reflect the approach to decision making
on remuneration matters.
– Recommendations to freeze NED fees for 2023 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 market and regulatory related developments impacting the Groups’ remuneration arrangements.
– Consideration of the necessity to exercise discretion over variable pay decisions.
– Potential employee implications from the IFM acquisition of ALX securities.
– Review progress against the Atlas Arteria 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.
– Executive Talent and 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 2022.
64 | ATLAS ARTERIA ANNUAL REPORT 2022
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 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.
Cessation of employment
Change of control
The Boards have discretion to determine that some or all deferred STI restricted security awards and unvested
LTIP awards are forfeited.
If a participant resigns or is terminated for cause
(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, the Boards may exercise
discretion such that the participant is 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.
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, the Boards may exercise
discretion such that a pro-rata number of unvested
performance rights (reflecting the portion of
performance period served) stay ‘on-foot’ to be tested
against the performance condition at the end of the
original performance period.
Upon a change of control:
– The Boards will determine in their absolute
discretion the treatment for STI.
– 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.
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 securityholding requirements
Minimum securityholding requirements apply to support the alignment between the interests of the Directors, executive KMP
and securityholders through significant exposure to the movements in securities price and distributions. Details of individual
securityholdings and progress against the expected holding requirements are included at section 9.3.
Role
Minimum shareholding
Timing to meet requirement
Non-executive Directors
100% of annual Director base fees
3 years from the date of their appointment
MD & CEO
100% of fixed remuneration
Other executive KMP
50% of fixed remuneration
5 years from appointment
5 years from appointment
8.6 Atlas Arteria Securities Trading Policy
The Atlas Arteria Securities Trading (Windows) 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 staff 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 2022
The following table shows the total remuneration for the MD & CEO and executive KMP for 2022.
Short-term employee benefits
Post
employment
benefits
Share based
payments
Name
year Cash salary
Financial
Annual
leave
accrual
movement
Cash STI 1
Superannuation
contributions
LTI Awards 1,2 STI Awards 3
Total
remuneration
Performance
based pay %
Graeme Bevans
2022
$1,375,570
($20,288)
$840,000
$24,430
$615,642
$902,852
$3,738,206
David Collins 4
Vincent
Portal-Barrault 5
Nadine Lennie 6
2021
$1,277,369
($38,944)
$819,000
$22,631
$548,066
$624,000
$3,252,122
2022
2021
2022
2021
2022
2021
$208,060
($5,741)
$70,950
$11,902
$30,866
$35,475
$351,512
–
–
–
–
–
–
–
$687,687
$9,242
$269,847
$16,747
$250,412
$259,869
$1,493,804
$632,210
$24,687
$249,892
$16,756
$235,495
$205,585
$1,364,625
$171,608
($8,469)
$95,424
$5,892
$74,141
$0
$338,596
$687,369
$13,168
$536,760
$22,631
$243,073
$81,000
$1,584,001
Total
Total
2022 $2,442,925
($25,256) $1,276,221
$58,971
$971,061 $1,198,196
$5,922,118
2021 $2,596,948
($1,089) $1,605,652
$62,018 $1,026,634
$910,585
$6,200,748
63.1%
61.2%
39.1%
–
52.2%
50.6%
50.1%
54.3%
58.2%
57.1%
1. 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 2022. The valuation has been made using a Stochastic Model which includes a Monte Carlo
simulation model. Details of the fair values of equity awards granted during the year are contained in the footnotes to the table titled ‘Performance Rights held
during the year’ at section 9.3.
2. The number of performance rights allocated to each participant is determined by dividing the remuneration value of the individual’s LTI award by the face value
of the securities to be granted (face value is calculated based on the post results 10 day VWAP).
3. The deferred equity award for 2022 for the MD & CEO is subject to securityholder approval at the 2023 Annual General Meeting. The fair value of the
MD & CEO’s 2021 STI award is based on the security price at the date of grant, 10 May 2022, and includes an amount in respect of the distribution paid on
31 March 2022.
4. Commenced 30 August 2022.
5. Converted to AUD at a rate of A$1 = €0.6590 (2021 €0.6347).
6. N Lennie ceased to be a KMP upon termination of employment on 31 March 2022. Under the terms of her separation, Ms Lennie did not receive a severance payment,
her 2021 and 2022 STI awards were payable in cash and Ms Lennie retained a pro rata number of unvested LTI awards all of which are subject to the original
performance hurdles applicable to the awards.
66 | ATLAS ARTERIA ANNUAL REPORT 2022
9.2 Non-executive Director statutory remuneration disclosures for 2022
The following table shows the fees paid to Non-executive Directors of ATLAX and ATLIX for 2022.
ATLAX fees (AUD)
Post
employment
benefits
Short-term
benefits
Cash salary
ATLIX fees (USD)
Post
employment
benefits
Short-term
benefits
Cash salary
Name
Financial year
and fees Superannuation
Total
and fees 1 Superannuation 1
Total 1
Debra Goodin 2
Ariane Barker
David Bartholomew 3
Jean-Georges Malcor
Jeffrey Conyers
Fiona Beck
Andrew Cook 3
Caroline Foulger
Total – AUD
Total – AUD
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
$305,570
$257,369
$179,155
$140,408
$203,979
$157,234
$202,500
$160,115
$24,430
$22,631
$18,345
$13,759
$13,521
$15,324
$0
$0
$330,000
$280,000
$197,500
$154,167
$217,500
$172,558
$202,500
$160,115
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$891,204
$715,126
$56,296
$51,714
$947,500
$766,840
$50,000
A$89,294
$5,000
A$8,706
$55,000
A$98,000
–
–
–
–
–
–
$220,000
$160,000
$137,018
$107,000
$142,268
$89,000
$137,018
$98,000
$989,909
$694,305
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$7,212
$8,706
–
–
–
–
–
–
$220,000
$160,000
$137,018
$107,000
$142,268
$89,000
$137,018
$98,000
$997,121
$703,011
1. Fees payable to ATLIX Non-executive Directors converted to AUD at the average 2022 exchange rate of A$1 = US$0.6933 (2021 A$1 = US$0.7258).
2. Reflects the rebalance of fees across ATLAX and ATLIX.
3. Additional fees for duties performed as a member of the due diligence committee in respect of the Chicago Skyway Transaction and the Equity Raise – D Bartholomew
$12,500 and A Cook US$5,250.
9.3 Equity instrument disclosures relating to KMP
Securityholdings
The table below outlines the number of ordinary securities held by each KMP including their personally related parties, as at
31 December 2022, and the minimum securityholding requirements.
Non-executive Directors have acquired their securityholdings from their personal resources on market and in accordance with
Atlas Arteria’s trading policy. Executive KMP acquire their securityholdings from awards that vest under the Groups’ equity plans
and from purchases on market. All Directors and Executives are tracking to meet their securityholding requirement in accordance
with the Groups’ policy.
Non-executive Directors
Name
Debra Goodin
Ariane Barker
David Bartholomew
Jean-Georges Malcor
Jeffrey Conyers
Fiona Beck
Andrew Cook
Caroline Fougler
Balance at
1 January 2022
50,678
13,600
25,214
30,076
59,838
25,853
20,000
21,000
Changes
25,989
24,524
6,465
15,423
30,686
27,176
13,000
20,602
Balance at
31 December
2022
Value at
31 December
2022 1
Minimum
securityholding
requirement 2
Date
securityholding
to be attained
76,667
38,124
31,679
45,499
90,524
53,029
33,000
41,602
$506,769
$252,000
$209,398
$300,748
$598,364
$350,522
$218,130
$274,989
$235,990
$155,000
$155,000
$155,000
$161,979
$161,979
$161,979
$161,979
Nov-23
Mar-24
Oct-21
Nov-21
Jul-20
Sep-22
Nov-23
May-23
1. Based on the closing price of Atlas Arteria securities on 31 December 2022 of $6.61. The requirement is assessed at the higher of the purchase price or market
value of the securities.
2. The minimum securityholding requirement for ATLIX Board members has been converted to AUD at the 31 December 2022 exchange rate of A$ = US$0.6791.
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REMUNERATION REPORT
Executive KMP
Name
Graeme Bevans
David Collins 2
Balance at
1 January
2022
Changes
during the
year
Granted
during the
year as
compensation
Received
during the
year exercise
of a right
Balance at
31 December
2022 1
Value at
31 December
2022
Minimum
security
holding
requirement
Date security
holding to be
attained
Vincent Portal-Barrault 3
66,087
-12,600
37,455
229,659
86,029
127,570
–
–
–
–
–
443,258
$2,929,935
$1,400,000
–
–
$322,500
90,942
$601,127
$358,468
May-23
Sep-27
Dec-23
1. Based on the closing price of Atlas Arteria securities on 31 December 2022 of $6.61. The requirement is assessed at the higher of the purchase price or market value
of the securities.
2. Commenced as a KMP Executive on 30 August 2022.
3. The minimum security holding requirement for the Luxembourg based executive has been converted to A$ at the 31 December 2022 exchange rate of A$1 = €0.6360.
Performance rights held during the year
The terms and conditions of each grant of share rights affecting remuneration in the current or a future reporting period are as follows:
Grant date
Performance
period start
date
Vesting and
exercise date
Exercise
price
$
TBC 1
1 January 2022 31 December 2024
TBC 1
1 January 2022 31 December 2024
8/11/2022 2
1 January 2022 31 December 2024
8/11/2022 2
1 January 2022 31 December 2024
10/05/2022 2 1 January 2022 31 December 2024
10/05/2022 2 1 January 2022 31 December 2024
6/04/2022 2
1 January 2022 31 December 2024
6/04/2022 2
1 January 2022 31 December 2024
28 April 2021 1 January 2021 31 December 2023
19/05/2020 3 1 January 2020 31 December 2022
3/03/2020 3
1 January 2020 31 December 2022
21 June 2019 1 January 2019 31 December 2021
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Expiry date
28 February 2025
28 February 2025
28 February 2025
28 February 2025
28 February 2025
28 February 2025
28 February 2025
28 February 2025
28 February 2024
28 February 2023
28 February 2023
28 February 2022
Grant date
fair value
of per-
formance
rights
$
Performance
achieved
#
%
Vested
%
Minimum
value yet
to vest
$
Maximum
value yet
to vest
$
4.26 To be tested
4.42 To be tested
4.26 To be tested
4.42 To be tested
4.17 To be tested
4.75 To be tested
3.59 To be tested
6.58 To be tested
2.95 To be tested
3.43 Below threshold
5.02 Below threshold
3.63 Below threshold
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Nil
Nil
Nil
0
0
0
0
0
0
0
0
0
N/A
N/A
N/A
27,502
31,479
129,476
144,882
289,025
410,069
90,284
211,121
329,531
N/A
N/A
N/A
1. The 2022 LTI award of performance rights to be awarded to the MD & CEO, subject to securityholder approval at the 2023 AGM. The grant date has been estimated
for the purposes of expensing.
2. The value per instrument of the performance rights granted during the year with relative and positive absolute TSR hurdles was $3.59 (6 April 2022), $4.17 (10 May 2022)
and 4.26 (8 November 2022). The value per instrument of the performance rights granted during the year with strategic and positive absolute TSR hurdles was
$6.58 (6 April 2022), $4.75 (10 May 2022) and $4.42 (8 November 2022).
3. The 2020 LTI Award was tested following the end of the performance period on 31 December 2022. The result was below threshold and hence the vesting outcome was nil.
68 | ATLAS ARTERIA ANNUAL REPORT 2022
The numbers of performance rights over ordinary securities in the Groups held during the financial year by each executive KMP
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
David Collins
Vincent Portal-Barrault 4
Nadine Lennie 5
Balance at
31 December
2021
#
Granted in the
year ended
31 December
2022 1
#
Exercised in the
year ended
31 December
2022
#
Lapsed in the
year ended
31 December
2022 2
#
Balance at
31 December
2022
#
Unvested at
31 December
2022
#
Value of
performance
rights granted
during year 3
#
533,941
202,492
0
195,150
208,466
70,328
73,536
0
0
0
0
0
(157,419)
0
(60,077)
(124,638)
579,014
70,328
208,609
83,828
579,014
70,328
208,609
83,828
903,114
305,224
373,931
N/A
1. The number of performance rights granted during the year under the 2022 Long Term Incentive Awards which are subject to performance hurdles.
2. The number of performance rights lapsed during the year under the 2019 Long Term Incentive Award.
3. External valuation advice from Aon has been used to determine the value of the performance rights awarded during year ended 31 December 2022. The valuation
was made using a Stochastic Model which includes a Monte Carlo simulation model. The value per instrument of the performance rights granted during the year
with relative and positive absolute TSR hurdles was $3.59 (6 April 2022), $4.17 (10 May 2022) and $4.26 (8 November 2022). The value per instrument of the
performance rights granted during the year with strategic and positive absolute TSR hurdles was $6.58 (6 April 2022), $4.75 (10 May 2022) and $4.42 (8 November
2022).
4. In April 2022, Vincent Portal-Barrault was awarded 36,798 performance rights with vesting subject to achieving a number of strategic outcomes. These awards
had an original value of $6.58 and were due to expire over a 2-3 year period, depending on the outcome of the performance conditions described above. In April
2022, these awards were modified at the discretion of the Board and the terms of the award were amended with the inclusion of an additional positive TSR
gateway as a market condition and a fixed vesting period of 3 years. This resulted in a decrease in the fair value from $6.58 to $4.75. As the revised terms are
non-beneficial to Vincent and result in a decrease in the fair value, the performance rights will continue to be recognised under the original fair value as if the
terms have not been modified, consistent with AASB 2.
5. N Lennie ceased to be a KMP upon termination of employment on 31 March 2022. The number lapsed includes performance rights forfeited on termination of
employment. The balance represents her net holding on the date she ceased to be a KMP.
Unvested STI Equity Awards during 2022
During 2022, awards of restricted securities equal to 50% of their awards under the Groups 2021 STI Plan were granted to the
executive KMP. The securities were restricted for 12 months from the end of the performance period (31 December 2021).
Following the end of the restriction period on 31 December 2022, the PRCs have confirmed all executive KMP complied with
the terms of the awards and accordingly, the awards have vested in full.
Details of the Awards are as follows:
Balance at
31 December
2021
#
Granted in the
year ended
31 December
2022 1
#
Vested in the
year ended
31 December
2022 2
#
Lapsed in the
year ended
31 December
2022
#
Balance at
31 December
2022
#
Unvested at
31 December
2022
#
Value of
restricted
securities
granted during
year
$
75,929
N/A
26,763
28,673
127,570
N/A
37,455
0
75,929
N/A
26,763
28,673
0
N/A
0
0
127,570
127,570
810,071
N/A
37,455
–
N/A
37,455
–
N/A
249,851
N/A
Name
Graeme Bevans
David Collins 3
Vincent Portal-Barrault
Nadine Lennie 4
1. Restricted Securities granted in respect of the 2021 STI Plan. These securities vested in full in January 2023.
2. Restricted Securities granted in respect of the 2020 STI Plan. These securities vested in full in January 2022.
3. Commenced 30 August 2022.
4. Under the terms of Ms Lennie’s separation from Atlas Arteria her 2021 STI award was paid in cash.
9.4 Loans to Directors or related parties
There were no loans to Directors or related parties during 2022.
9.5 Other transactions with KMP
There were no other transactions with KMP.
ATLAS ARTERIA ANNUAL REPORT 2022 | 69
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS FINANCIAL REPORT
for the year ended 31 December 2022
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 Profit/(loss) 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
70 | ATLAS ARTERIA ANNUAL REPORT 2022
71
72
73
75
76
77
77
78
79
80
82
83
83
84
87
87
88
89
90
91
91
91
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
Directors’ Declaration – Atlas Arteria International Limited
Directors’ Declaration – Atlas Arteria Limited
Independent Auditor’s Report
92
94
99
99
100
100
102
104
104
105
106
107
108
109
110
110
111
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Revenue and other income from continuing operations
Total revenue and other income from continuing operations
Operating expenses
Net finance costs
Share of profit/(loss) of equity accounted investments
Profit/(loss) before income tax
Income tax benefit/(expense)
Profit/(loss) for the year
Profit/(loss) attributable to:
Securityholders of the parent entity – ATLIX
Securityholders of other stapled entity – ATLAX
(as non-controlling interest/parent entity)
Stapled securityholders
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Share of other comprehensive income of equity accounted
investments, net of tax
Items that will not be reclassified to profit or loss:
Gain/(loss) on cash flow hedges
Share of other comprehensive income of equity accounted
investments, net of tax
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Total comprehensive income/(loss) attributable to:
Securityholders of the parent entity – ATLIX
Securityholders of other stapled entity – ATLAX
(as non-controlling interest/parent entity)
Stapled securityholders
Profit/(loss) per share attributable to ATLIX/ATLAX
securityholders
Basic profit/(loss) per share attributable to:
ATLIX (as parent entity)
ATLAX (as non-controlling interest/parent entity)
Basic profit/(loss) per ALX stapled security
Diluted profit/(loss) per share attributable to:
ATLIX (as parent entity)
ATLAX (as non-controlling interest/parent entity)
Diluted profit/(loss) per ALX stapled security
Note
2.1.1
2.1.2
2.1.3
3.2.2
2.4.1
5.3
3.2.2
5.3
3.2.2
2.3
2.3
2.3
2.3
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
140,369
(141,589)
(90,958)
336,380
244,202
(3,191)
241,011
100,655
(125,430)
(131,346)
284,051
127,930
35,767
163,697
30,277
(31,624)
(10,848)
(13,619)
(25,814)
(134)
16,415
(25,830)
106
(10,203)
(19,512)
–
(25,948)
(19,512)
266,959
(25,948)
183,209
(19,512)
–
–
(25,948)
(19,512)
241,011
163,697
(25,948)
(19,512)
60,107
44,376
25,012
(1,690)
(27,851)
13,432
–
–
–
–
25,012
–
38,444
12,496
5,486
–
–
–
5,486
(14,026)
127,805
368,816
(27,851)
135,846
356,320
12,496
149,872
(14,026)
–
–
12,496
(14,026)
368,816
135,846
12,496
(14,026)
Cents
Cents
Cents
Cents
24.6
(2.4)
22.2
24.6
(2.4)
22.2
19.1
(2.0)
17.1
19.1
(2.0)
17.1
–
(2.4)
(2.4)
–
(2.4)
(2.4)
–
(2.0)
(2.0)
–
(2.0)
(2.0)
The above Consolidated Statements of Comprehensive Income should be read in conjunction with the accompanying notes.
ATLAS ARTERIA ANNUAL REPORT 2022 | 71
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Current assets
Cash and cash equivalents
Financial assets at amortised cost
Other assets
Total current assets
Non-current assets
Restricted cash
Intangible assets – Tolling concessions
Investments accounted for using the equity method
Goodwill
Deferred tax assets
Property, plant and equipment
Derivative financial instruments
Other assets
Total non-current assets
Total assets
Current liabilities
Other liabilities
Debt at amortised cost
Total current liabilities
Non-current liabilities
Debt at amortised cost
Deferred tax liabilities
Other liabilities
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
Note
3.1
6.4.3
4.3
3.1
4.1
3.2
4.2
2.4.2
4.3
4.4
5.1
5.1
2.4.2
4.4
5.2
5.3
5.2
5.3
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
229,389
62,034
42,758
275,899
245,766
11,846
533,511
–
15,796
245,185
215,575
226,325
2,167,908
2,101,414
–
8,845
70,879
–
–
–
6,135
48,893
–
–
5,350,106
2,591,821
2,863,631
99,986
13,821
21,875
15,679
–
58
13,719
23,536
16,919
188
76
–
–
–
–
4,309
5,541
–
–
–
6
7,785,022
4,973,998
8,318,533
5,219,183
2,867,940
2,938,819
105,533
154,426
(23,646)
(100,113)
(123,759)
(16,661)
(92,300)
(108,961)
(1,609,446)
(1,532,061)
(32,973)
(61,883)
(29,704)
(50,463)
(1,704,302)
(1,612,228)
(1,828,061)
(1,721,189)
(14,074)
–
(14,074)
–
–
(2,880)
(2,880)
(16,954)
6,490,472
3,497,994
2,921,865
3,993,984
3,747,750
49,207
(474,584)
(40,049)
(353,141)
3,568,607
3,354,560
–
–
–
–
(7,396)
–
(7,396)
–
–
(3,596)
(3,596)
(10,992)
143,434
–
–
–
–
2,991,044
202,075
2,991,044
42,771
(111,950)
2,921,865
27,361
(86,002)
143,434
6,490,472
3,497,994
42,771
(111,950)
2,921,865
2,921,865
202,075
27,361
(86,002)
143,434
143,434
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 22 February 2023 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
72 | ATLAS ARTERIA ANNUAL REPORT 2022
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 31 December 2021
3,747,750
(40,049)
(353,141)
3,354,560
143,434
3,497,994
Profit/(loss) for the year
Other comprehensive income/(loss)
for the year
Total comprehensive income/(expense)
Transfer of hedging gains to carrying
value of equity accounted investment
(refer to note 5.3)
Transactions with securityholders in their
capacity as equity holders:
–
–
–
–
Issue of securities (refer to note 5.2)
251,327
Transaction costs associated with issue
of securities (refer to note 5.2)
Employee performance rights
(refer to note 5.3)
Dividends paid (refer to note 2.2)
Total equity at 31 December 2022
(5,093)
–
–
246,234
3,993,984
–
266,959
266,959
(25,948)
241,011
89,361
89,361
–
266,959
89,361
356,320
38,444
12,496
127,805
368,816
–
–
–
(105)
–
(105)
–
–
–
–
(388,402)
(388,402)
–
(25,012)
(25,012)
251,327
2,847,111
3,098,438
(5,093)
(58,142)
(63,235)
(105)
(388,402)
(142,273)
1,978
1,873
–
(388,402)
2,765,935
2,623,662
49,207
(474,584)
3,568,607
2,921,865
6,490,472
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 2020
3,747,750
(8,233)
(263,030)
3,476,487
157,849
3,634,336
Adjustment due to change in
accounting standard
–
–
–
–
(430)
(430)
Total equity at 1 January 2021
3,747,750
(8,233)
(263,030)
3,476,487
157,419
3,633,906
Profit/(loss) for the year
Exchange differences on translation
of foreign operations
Total comprehensive income/(expense)
Transactions with securityholders in their
capacity as equity holders:
Employee performance rights
(refer to note 5.3)
Dividends paid (refer to note 2.2)
–
–
–
–
–
–
Total equity at 31 December 2021
3,747,750
–
183,209
183,209
(19,512)
163,697
(33,337)
(33,337)
–
183,209
(33,337)
149,872
5,486
(14,026)
(27,851)
135,846
1,521
–
1,521
(40,049)
–
(273,320)
(273,320)
1,521
(273,320)
(271,799)
41
–
41
1,562
(273,320)
(271,758)
(353,141)
3,354,560
143,434
3,497,994
The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.
ATLAS ARTERIA ANNUAL REPORT 2022 | 73
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
Attributable to ATLAX securityholders
Contributed
equity
$’000
Reserves
$’000
Accumulated
Losses
$’000
202,075
27,361
38,444
(25,948)
ATLAX Group
Total equity at 31 December 2021
Loss for the year
Exchange differences on translation of foreign operations
Gain/(loss) on cash flow hedges
Total comprehensive income/(expense)
Transfer of hedging gains to carrying value of equity accounted investment
(refer to note 5.3)
Transactions with securityholders in their capacity as equity holders:
Employee performance rights (refer to note 5.3)
Issue of securities (refer to note 5.2)
Transaction costs associated with issue of securities (refer to note 5.2)
Total equity at 31 December 2022
–
–
–
–
–
–
2,847,111
(58,142)
2,788,969
2,991,044
–
13,432
25,012
(25,012)
1,978
–
–
(23,034)
42,771
Total
$’000
143,434
(25,948)
13,432
25,012
12,496
(25,012)
1,978
2,847,111
(58,142)
2,765,935
(86,002)
(25,948)
–
–
–
–
–
–
–
(111,950)
2,921,865
ATLAX Group
Total equity at 31 December 2020
Adjustment due to change in accounting standard
Total equity at 1 January 2021
Loss for the year
Exchange differences on translation of foreign operations
Total comprehensive income/(expense)
Transactions with securityholders in their capacity as equity holders:
Employee performance rights (refer to note 5.3)
Total equity at 31 December 2021
Attributable to ATLAX securityholders
Contributed
equity
$’000
Reserves
$’000
Accumulated
Losses
$’000
Total
$’000
202,075
21,834
(66,060)
157,849
–
202,075
–
–
–
–
–
21,834
–
5,486
5,486
(430)
(66,490)
(19,512)
–
(19,512)
(430)
157,419
(19,512)
5,486
(14,026)
41
–
41
202,075
27,361
(86,002)
143,434
The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.
74 | ATLAS ARTERIA ANNUAL REPORT 2022
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Toll revenue (received net of transaction processing fees)
Interest received
Other income received
Property taxes paid
Payments to suppliers and employees (inclusive of GST/VAT)
Net income taxes (paid)/received
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
117,862
19,374
1,322
(2,745)
(61,938)
(89)
73,786
99,739
142
3,645
(2,360)
–
14,197
12,698
–
–
86
11,261
–
(53,660)
(27,300)
(17,816)
–
47,506
(89)
(494)
–
(6,469)
Distributions received from equity accounted investments
406,888
307,842
–
Payment for purchase of investments
Payments to suppliers associated with the purchase of investments
Proceeds from financial instruments held for investments
Payment for purchase of financial assets
Proceeds from financial instruments held for financial assets
Payments for capital projects
Additions to tolling concessions
Purchase of fixed assets
Sale of fixed assets
(2,757,803)
(25,227)
14,086
(245,766)
2,843
(277)
–
(357)
48
–
–
–
–
–
(2,121)
(207)
(1,466)
–
(2,757,803)
(25,227)
14,086
–
–
(99)
–
(84)
–
Net cash inflow/(outflow) from investing activities
(2,605,565)
304,048
(2,769,127)
Cash flows from financing activities
Repayment of debt (including transaction costs)
Interest paid
Proceeds from borrowings (net of transaction costs)
(95,251)
(7,175)
–
Proceeds from the issue of securities (net of transaction costs)
3,043,383
Payments to suppliers associated with the issue of securities
Transfer from restricted cash
Dividends paid
Lease principal payments
Proceeds from derivative financial instrument
(285,788)
(7,475)
176,137
–
–
9,800
(7,846)
25,622
(388,402)
(273,320)
(1,779)
4,798
(1,541)
–
–
(7)
–
2,796,523
(7,271)
–
–
(806)
–
Net cash inflow/(outflow) from financing activities
2,573,350
(382,187)
2,788,439
Net (decrease)/increase 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
41,571
229,389
4,939
(30,633)
260,341
(319)
275,899
229,389
18,818
42,758
458
62,034
The above Consolidated Statements of Cash Flows should be read in conjunction with the accompanying notes.
–
–
–
–
–
–
(640)
–
(1,004)
–
(1,644)
–
(5)
–
–
–
–
–
(530)
–
(535)
(8,648)
52,130
(724)
42,758
ATLAS ARTERIA ANNUAL REPORT 2022 | 75
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 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. 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 the 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 2022.
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 22 February 2023 and 23 February 2023 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.
− 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 2022 and the results of the subsidiaries for the year then
ended. Inter-entity transactions with, or between, subsidiaries are eliminated in full on consolidation.
− include the application of equity accounting for associates and joint ventures.
− 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 during the year ended 31 December 2022.
Key developments in 2022
On 1 December 2022 the ATLAX Group acquired a 66.67% majority interest the Chicago Skyway via Calumet Concession Partners Inc
(CCPI) representing an equity value of US$2,013 million, which includes the shareholder loans acquired by the ATLIX Group.
In conjunction with the Chicago Skyway acquisition Atlas Arteria completed a fully underwritten 1 for 1.95 pro-rata accelerated
non-renounceable entitlement offer of new stapled ALX securities to raise $3,098 million (the Equity Raise).
The proceeds of the Equity Raise were used to fund the Chicago Skyway acquisition.
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:
− Deferred tax assets (note 2.4)
− Control assessment (note 3.2)
− Equity accounted investment – measurement at provisional amounts (note 3.2)
− Impairment of assets and equity accounted investments (note 3.2 and 4.1)
− Provisions for toll road maintenance (note 4.4)
76 | ATLAS ARTERIA ANNUAL REPORT 2022
2 Financial performance
2.1 Profit/(loss) for the year
Revenue recognition
Revenue and other income is recognised as follows:
Toll revenue
A single 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 income
Other income from customers consists of revenue earned in respect of rental income from cell towers and income from
advertising hoardings on the toll road. Other income is recognised over the period of the contract in accordance with the
contracts governing these services as performance obligations are satisfied. Other income for the ATLAX Group comprises
advisory and administrative service fees to related parties.
Interest income
Interest income on cash and cash equivalents and financial assets at amortised costs are brought to account on an accruals
basis in accordance with the effective interest method.
The profit/(loss) before income tax includes the following specific items of income and expense:
2.1.1 Revenue and other income from continuing operations
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Revenue and other income from continuing operations:
Toll revenue
Other income
Interest income (a)
116,728
1,513
22,128
99,530
985
140
Total revenue and other income from continuing operations
140,369
100,655
(a) Interest income includes interest on the CCPI shareholder loans with the ATLIX Group from 1 December 2022.
–
16,080
14,197
30,277
–
16,329
86
16,415
2.1.2 Operating expenses
Operating expenses
Amortisation of tolling concession
Cost of operations:
Toll road maintenance expenses
Other operating expenses
Employee benefits expenses
Total cost of operations
Consulting and administration fees
Other expenses
Depreciation and amortisation
Total operating expenses
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
64,313
60,039
17,157
5,225
29,498
51,880
9,773
13,691
1,932
14,604
6,875
26,604
48,083
4,748
11,119
1,441
141,589
125,430
–
–
6
17,386
17,392
5,060
8,080
1,092
31,624
–
–
65
15,463
15,528
3,204
6,525
573
25,830
ATLAS ARTERIA ANNUAL REPORT 2022 | 77
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 2.1.3 Net finance costs
Interest on debt
Mark to market (gain)/loss on derivatives
Fee on early repayment of borrowings
Warnow Tunnel removal of fair value adjustment with legacy debt
repayment (refer to note 5.1)
Hedge ineffectiveness arising from the deal contingent premium
on the swap for the Chicago Skyway acquisition
Amortisation of issue cost on borrowings from financial institutions
Mark to market (gain) on the Chicago Skyway short-dated outright
foreign exchange forward contracts
FX impact of significant transactions during period
Net foreign exchange (gains)/losses
Other interest costs
Net finance costs/(income)
2.2 Distributions
Distributions paid
Dividend paid on 3 October 2022 (a)
Dividend paid on 31 March 2022 (b)
Dividend paid on 5 October 2021 (c)
Dividend paid on 9 April 2021 (d)
Total distributions paid
Distributions paid
Dividend per stapled security paid on 3 October 2022 (a)
Dividend per stapled security paid on 31 March 2022 (b)
Dividend per stapled security paid on 5 October 2021 (c)
Dividend per stapled security paid on 9 April 2021 (d)
Total distributions paid
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
87,093
(4,498)
–
–
10,926
152
(24,043)
21,200
(1,626)
1,754
90,958
80,211
(632)
762
50,332
–
76
–
–
(1,042)
1,639
–
–
–
–
10,926
–
–
–
(247)
169
131,346
10,848
–
–
–
–
–
–
–
–
(115)
9
(106)
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
191,804
196,598
–
–
388,402
–
–
148,648
124,672
273,320
–
–
–
–
–
–
–
–
–
–
Cents per
stapled
security
Cents per
stapled
security
Cents per
stapled
security
Cents per
stapled
security
20.0
20.5
–
–
40.5
–
–
15.5
13.0
28.5
–
–
–
–
–
–
–
–
–
–
(a) The dividend paid on 3 October 2022 comprised an ordinary dividend of 20.0 cents per stapled security (cps). The dividend was paid in full by ATLIX.
(b) The dividend paid on 31 March 2022 comprised an ordinary dividend of 20.5 cps. The dividend was paid in full by ATLIX.
(c) The dividend paid on 5 October 2021 comprised an ordinary dividend of 15.5 cps. The dividend was paid in full by ATLIX.
(d) The dividend paid on 9 April 2021 comprised an ordinary dividend of 13.0 cps. The dividend was paid in full by ATLIX.
78 | ATLAS ARTERIA ANNUAL REPORT 2022
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 or loss 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
Earnings/(loss) used in the calculation of basic and diluted
profit/(loss) per ATLIX/ATLAX share
Attributable to ATLIX
securityholders
Attributable to ATLAX
securityholders
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
24.6
24.6
$'000
19.1
19.1
$'000
(2.4)
(2.4)
$'000
(2.0)
(2.0)
$'000
266,959
183,209
(25,948)
(19,512)
Number
Number
Number
Number
Weighted average number of shares used in calculation of basic
earnings/(loss) per ATLIX/ATLAX share
1,084,244,598
959,018,226
1,084,244,598
959,018,226
Adjustment for employee performance rights (a)
1,508,641
1,172,299
1,508,641
1,172,299
Weighted average number of shares used in calculation of diluted
earnings/(loss) per ATLIX/ATLAX share
1,085,753,239
960,190,525
1,085,753,239
960,190,525
(a) Diluted earnings per ALX stapled security are adjusted for employee performance rights. Refer to note 7.4 for details.
During the year ended 31 December 2022, the Groups undertook a $3,098.4 million Equity Raise comprising a fully underwritten
1 for 1.95 pro-rata accelerated non-renounceable entitlement offer to fund the Chicago Skyway acquisition. The Equity Raise resulted
in the issuance of 491.8 million new fully paid ordinary stapled securities. The new stapled securities were issued at a price of
$6.30 per security.
ATLAS ARTERIA ANNUAL REPORT 2022 | 79
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 2.4 Income tax
The income tax expense or benefit for the year is the amount of income taxes payable or recoverable on the current year’s
taxable income or loss based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences 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, deferred income tax is not accounted for if it arises from the initial
recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been
enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is
realised or the deferred 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 Bermudian 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.
2.4.1 Income tax (benefit)/expense
This note provides an analysis of the Groups’ income tax (benefit)/expense, shows what amounts are recognised directly in equity
and how the tax (benefit)/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 (benefit)/expense
Current tax
Deferred tax
Total income tax (benefit)/expense
(b) Reconciliation of income tax (benefit)/expense to prima facie tax payable
Profit/(loss) from operations before income tax
Prima facie income tax on profit/(loss) 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-deductible expenditure
Non-deductible cost of hedging
Share of (profit)/loss of equity accounted investments
Temporary differences not brought to account
Deferred tax assets on taxable losses not brought to account
Temporary differences not previously recognised
Initial recognition of prior period unused tax losses
Unused tax losses recouped to reduce current tax expense
Other Items
Aggregate income tax (benefit)/expense
(c) Tax losses
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
211
2,980
3,191
6,864
(42,631)
(35,767)
134
–
134
–
–
–
244,202
73,261
127,930
38,379
(25,814)
(7,744)
(19,512)
(5,854)
21,495
9,764
4
1
5,170
3,278
32,280
–
(100,914)
(85,215)
(6)
5,198
669
–
(4,204)
(756)
3,191
(1,299)
6,658
(465)
(29,016)
(6,853)
–
(35,767)
3,598
3,278
4,086
136
1,668
–
–
(4,065)
(827)
134
561
–
3,061
716
1,515
–
–
–
–
–
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit of unused tax losses
407,988
96,450
386,728
91,271
359,813
84,115
337,417
79,583
There was no current or deferred tax recognised 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 €24.7 million expire after
17 years.
80 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS 2.4.2 Deferred tax assets and liabilities
The Groups exercise judgement in assessing carried forward tax losses that are highly probably to be utilised.
During the year ended 31 December 2021, the Groups exercised judgement in reviewing forecast taxable profits at Warnow Tunnel
and recognised deferred tax assets in relation to previously unbooked tax losses. This assessment arose following the capital
restructure in March 2021, which strengthened the probability of future taxable profits being available to utilise the losses.
The movement in the balance of deferred tax assets (DTA) and deferred tax liabilities (DTL) is as follows:
ALX
ATLAX Group
Current and
prior year
losses
$’000
Fixed
assets/
intangibles
$’000
Provisions
$’000
Other
$’000
Total
$’000
Current and
prior year
losses
$’000
Total
$’000
Deferred tax relates to the following:
Opening balance at 1 January 2021
–
(40,395)
(Charged)/credited to profit/(loss)
Foreign exchange movement
Losses recognised
Closing balance at 31 December 2021
(Charged)/credited to profit/(loss)
Foreign exchange movement
Losses recognised
(6,853)
(338)
42,861
35,670
(4,851)
241
4,204
4,944
(1,300)
–
(36,751)
(1,434)
(2,182)
–
Closing balance at 31 December 2022
35,264
(40,367)
–
573
20
–
593
273
46
–
912
–
(40,395)
(5,747)
67
–
(5,680)
(1,172)
(55)
–
(7,083)
(1,551)
42,861
(6,168)
(7,184)
(1,950)
4,204
–
–
–
–
–
–
–
–
–
–
(4,065)
(4,065)
–
–
4,065
4,065
(6,907)
(11,098)
–
–
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Deferred tax asset
The balance comprises temporary differences attributable to:
– Current and prior year losses
35,264
35,670
– Provisions
– Other
Total deferred tax asset
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
Deferred tax liability
The balance comprises temporary differences attributable to:
– Fixed assets/intangibles
– Other
Total deferred tax liability
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax liabilities
912
–
36,176
(14,301)
21,875
(40,367)
(6,907)
(47,274)
14,301
(32,973)
593
309
36,572
(13,036)
23,536
(36,751)
(5,989)
(42,740)
13,036
(29,704)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
ATLAS ARTERIA ANNUAL REPORT 2022 | 81
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 2.5 Segment information
Operating segments are reported in a manner consistent with the internal reporting 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 five operating segments for Atlas
Arteria and two operating segments for the ATLAX Group. The segments of Atlas Arteria are the investments in APRR, ADELAC,
Chicago Skyway, Dulles Greenway and Warnow Tunnel. The segments for the ATLAX Group are the investments in Chicago Skyway
and Dulles Greenway.
2.5.2 Segment information
The proportionately consolidated segment information for the reportable segments for the year ended 31 December 2022, based on
Atlas Arteria’s economic ownership interest, is as follows:
ALX
Segment revenue
Segment expenses
Segment EBITDA
EBITDA margin
ATLAX Group
Segment revenue
Segment expenses
Segment EBITDA
EBITDA margin
Year ended
31-Dec-22
31-Dec-21
31-Dec-22
31-Dec-21
31-Dec-22
31-Dec-21
31-Dec-22
31-Dec-21
Year ended
31-Dec-22
31-Dec-21
31-Dec-22
31-Dec-21
31-Dec-22
31-Dec-21
31-Dec-22
31-Dec-21
APRR
$’000
ADELAC
$’000
1,331,847
1,260,656
(346,801)
(331,928)
985,046
928,728
74%
74%
28,950
23,513
(5,376)
(3,944)
23,574
19,569
81%
83%
Warnow
Tunnel
$’000
20,114
19,995
(6,228)
(6,342)
13,886
13,653
69%
68%
Chicago
Skyway (a)
$’000
Dulles
Greenway
$’000
8,794
–
(1,579)
–
7,215
–
82%
–
98,068
80,460
(20,177)
(18,915)
77,891
61,545
79%
76%
Total ALX
$’000
1,487,773
1,384,624
(380,161)
(361,129)
1,107,612
1,023,495
74%
74%
Chicago
Skyway (a)
$’000
Dulles
Greenway
$’000
Total
ATLAX Group
$’000
8,794
–
(1,579)
–
7,215
–
82%
–
13,174
10,808
(2,710)
(2,541)
10,464
8,267
79%
76%
21,968
10,808
(4,289)
(2,541)
17,679
8,267
80%
76%
(a) The segment information for Chicago Skyway is presented from the date of investment in CCPI on 1 December 2022.
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 of equity accounted investments are disclosed in note 3.2.3. Warnow Tunnel’s assets are
$241.5 million (2021: $254.8 million) and liabilities are $218.8 million (2021: $227.3 million). Dulles Greenway’s assets are
$2,297.9 million (2021: $2,224.7 million) and liabilities are $1,615.0 million (2021: $1,517.2 million).
82 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS A reconciliation of the Groups’ segment revenue and EBITDA to its total revenue and profit or loss before income tax is provided
as follows:
Reconciliation of segment revenue to statutory revenue
Segment revenue
Revenue attributable to non-consolidated investments
Unallocated revenue and other income (a)
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
Unallocated revenue (a)
Corporate costs
Amortisation and depreciation
Unallocated expenses
Net finance costs
Share of profit/(loss) of equity accounted investments
Profit/(loss) before income tax
ALX
ATLAX Group
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
1,487,773
1,384,624
(1,369,591)
(1,284,169)
22,187
140,369
200
100,655
1,107,612
1,023,495
(1,015,835)
(948,297)
22,187
(37,317)
(66,245)
(11,622)
(90,958)
336,380
244,202
200
(29,068)
(61,480)
(9,625)
(131,346)
284,051
127,930
21,968
(21,968)
30,277
30,277
17,679
(17,679)
30,277
(30,532)
(1,092)
–
(10,848)
(13,619)
(25,814)
10,808
(10,808)
16,415
16,415
8,267
(8,267)
16,415
(25,257)
(573)
–
106
(10,203)
(19,512)
(a) Unallocated revenue and other income includes interest income on funds held for the Chicago Skyway acquisition of $13.9 million in ATLAX Group and $1.4 million
in ATLIX Group.
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 (maturity of less than 3 months) that are readily convertible to cash with insignificant risk of changes in value.
Restricted cash includes funds held in escrow or amounts otherwise not available to meet short term commitments of the
Groups and is classified as a non-current asset.
Current
Cash on hand
Cash and cash equivalents
Non-current
Restricted cash
ALX
ATLAX Group
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
275,899
275,899
229,389
229,389
62,034
62,034
42,758
42,758
215,575
215,575
226,325
226,325
–
–
–
–
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 -1.26% and 4.02%
(2021: -2.28% and 0.20%) per annum.
Cash equivalents include TRIP II’s money market deposits paying interest between 0.01% and 4.20% (2021: 0.01% and 0.04%)
per annum.
3.1.2 Restricted cash
This comprises funds held in escrow pursuant to the TRIP II bond indenture agreements and Warnow Tunnel loan agreements.
Discussion of the Groups’ policies concerning the management of credit risk can be found in note 5.4.4.
ATLAS ARTERIA ANNUAL REPORT 2022 | 83
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 3.2 Investments accounted for using the equity method
Associates and joint ventures
Associates are entities over which the Groups have significant influence but not control or joint control. Joint ventures are joint
arrangements in which the Groups have joint control and rights to the net assets of the arrangement. The Groups’ investments
in associates and joint ventures are accounted for using the equity method.
The equity accounted investments are initially recognised at cost, including transaction costs. The Groups’ investment in associates
and joint ventures includes the fair value of goodwill (net of any accumulated impairment loss) identified on acquisition.
Subsequent to initial recognition, the Groups’ share of investees’ post-acquisition profit or loss and other comprehensive income
is recognised in profit or loss and other comprehensive income respectively. The post-acquisition results are adjusted against
the carrying amount of the investment. Distributions receivable from investees reduce the carrying amount of the investment.
When the Groups’ cumulative share of losses in an associate or joint venture equals or exceeds their interest in the investee,
including any long-term interests that, in substance, form part of the Groups’ net investment in the associate or joint venture,
the Groups do not recognise their share of further losses unless they have incurred obligations or made payments on behalf
of the associate or joint venture.
Unrealised gains on transactions between the Groups and their associates or joint ventures are eliminated to the extent of the
Groups’ interest in the associate or joint venture. Unrealised losses are also eliminated unless the transaction provides evidence
of an impairment of the asset transferred. Accounting policies of associates and joint ventures 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 the recoverable amount of the net investment in the
associate or joint venture. 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.
The net Investments in an associate or joint venture that have suffered an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period. Impairment losses are 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 amount.
Investments in associates
Investments in joint ventures
ALX
ATLAX Group
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
2,583,629
2,591,821
97,154
99,986
2,766,477
–
2,766,477
–
Investments accounted for using the equity method
5,350,106
2,591,821
2,863,631
99,986
Chicago Skyway acquisition
On 1 December 2022 the ATLAX Group acquired a 66.67% majority interest in CCPI which indirectly owns 100% of Skyway Concession
Company LLC, the concessionaire of the Chicago Skyway Toll Bridge (Chicago Skyway). It has been assessed that the ATLAX Group’s
investment in CCPI is classified as a joint venture as any decision made with regard to relevant activities effectively requires an
affirmative vote of the other party to the arrangement, despite the ATLAX Group holding more than half of the voting rights.
This judgement will be reassessed if there are any changes to the governance arrangements in the future.
The shareholder loans with CCPI are held by the ATLIX Group and do not form part of the equity accounted investment.
The shareholder loans are presented in the Statements of Financial Position as financial assets at amortised cost.
The summarised financial information relating to CCPI and the share of profit or loss included in the carrying amount of the
investment in CCPI as at 31 December 2022 are reported using provisional amounts based on estimates. As new information is
obtained about facts and circumstances that existed as of 1 December 2022 (acquisition date) and, if known, would have affected the
measurement of amounts recognised as of that date, the provisional amounts will be adjusted in the subsequent reporting period.
84 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS Information relating to material associates and joint ventures is set out below:
3.2.1 Carrying amounts
Country of
Incorporation/
Principal Place
of Business
Name of Entity (a)
MAF2 (b)
Luxembourg
CCPI (c), (d)
USA
TRIP II (e), (f), (g)
USA
Principal Activity
Investment in
toll road network
located in the
east of France
(APRR and
ADELAC)
Investment in the
Chicago Skyway
toll road located
south of Chicago,
USA
Investment in the
Dulles Greenway
toll road located
in northern
Virginia, USA
ALX Economic
interest
As at
31 Dec 2022
and
31 Dec 2021
%
ALX
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
ATLAX Group
Economic
Interest
As at
31 Dec 2022
and
31 Dec 2021
%
ATLAX Group
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
62.3/62.3
2,583,629
2,591,821
-/-
–
66.7/-
2,766,477
-/-
–
–
–
66.7/-
2,766,477
13.4/13.4
97,154
99,986
–
–
(a) All associates and joint ventures 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) On 1 December 2022, ATLAX Group acquired a 66.7% interest in CCPI which indirectly owns 100% of the concessionaire of the Chicago Skyway.
(d) ATLAX Group’s investment in CCPI is classified as a joint venture as any decision made with regard to relevant activities requires an affirmative vote of the other party
to the arrangement.
(e) 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.
(f) 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.
(g) The ATLAX Group assessed its equity accounted investment in TRIP II as at 31 December 2022. The key assumptions to determine value are traffic volumes,
long term CPI, average tolls and the post-tax discount rate.
3.2.2 Movement in carrying amounts
Carrying amount at the beginning of the year
Share of profit/(loss) after income tax (a)
Share of other comprehensive income after income tax
Distributions received/receivable
Investment in CCPI
Transaction costs
Foreign exchange movement
Carrying amount at the end of the year
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
2,591,821
2,685,357
336,380
42,686
284,051
–
(400,038)
(314,750)
99,986
(13,619)
104,685
(10,203)
–
–
2,736,879
26,607
15,771
–
–
(62,837)
2,736,879
26,607
13,778
5,350,106
2,591,821
2,863,631
–
–
–
–
5,504
99,986
(a) The share of profit/(loss) after income tax attributable to CCPI is measured using provisional amounts for the fair value of CCPI’s net assets as at the date of
investment in CCPI on 1 December 2022.
ATLAS ARTERIA ANNUAL REPORT 2022 | 85
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 3.2.3 Summarised financial information for material associates and joint ventures
The following tables summarise financial information for those associates and joint ventures that are material to 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. They have been amended to reflect adjustments made by Atlas Arteria and
ATLAX Group when using the equity method, including fair value adjustments and modifications for differences in accounting policy.
MAF2 (a)
CCPI (b)
TRIP II
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
Summarised Statement
of Financial Position
Total current assets
Total non-current assets
Total current liabilities
1,567,102
1,324,917
45,753
11,169,374
10,833,487
6,221,871
(1,955,400)
(1,354,879)
(647,025)
Total non-current liabilities
(7,687,773)
(7,729,725)
(2,366,962)
Net assets
3,093,303
3,073,800
3,253,637
Reconciliation to carrying amounts:
Opening net assets
Profit/(loss) for the year
Other comprehensive income
for the year
Distributions paid
3,073,800
3,125,259
3,250,572
588,584
516,631
(5,235)
79,198
–
(653,002)
(494,287)
–
–
Foreign exchange and other reserves
4,723
(73,803)
8,300
Closing net assets
ATLIX Group's share in %
3,093,303
3,073,800
3,253,637
62.3%
62.3%
ATLIX Group's share of net assets in $
2,434,871
2,456,378
ATLAX Group’s share in %
ATLAX Group’s share of net assets in $
–
–
–
–
Atlas Arteria's carrying amount
2,583,629
2,591,821
ATLAX Group’s carrying amount
–
–
–
–
66.7%
2,766,477
2,766,477
2,766,477
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
95,692
818,944
(101,917)
84,748
806,335
(94,855)
(1,505,513)
(1,399,767)
(692,794)
(603,539)
(603,539)
(46,930)
(518,485)
(54,205)
–
–
–
–
(42,325)
(30,849)
(692,794)
(603,539)
–
–
13.4%
97,154
–
–
–
13.4%
99,986
–
97,154
99,986
(a) MAF2 proportionately consolidates the results of APRR and ADELAC.
(b) The summarised statement of financial position is measured using provisional amounts for the fair value CCPI’s net assets as at the date of investment in CCPI on
1 December 2022.
Summarised Statement
of Comprehensive Income
Revenue
Profit/(loss) for the year
Other comprehensive income
for the year
Atlas Arteria's share
ATLAX Group’s share
MAF2 (a)
CCPI (b)
TRIP II
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
2,416,741
2,282,097
588,584
516,631
79,198
340,516
–
–
284,051
–
13,190
(5,235)
–
(4,136)
(4,136)
–
–
–
–
–
–
–
–
–
98,068
(46,930)
80,460
(54,205)
–
–
–
–
(9,483)
(10,203)
–
–
–
–
Atlas Arteria’s distributions received
400,038
314,750
ATLAX Group’s distributions received
–
–
(a) MAF2 proportionately consolidates the results of APRR and ADELAC.
(b) The summarised statement of comprehensive income is measured using provisional amounts for the fair value of CCPI’s net assets as at the date of investment in CCPI
on 1 December 2022.
86 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS 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 operated by
subsidiaries. Tolling concessions relating to non-controlled equity accounted investments are recognised as a component of the
investments accounted for using the equity method.
Tolling concessions have a finite useful life as defined by the terms of the concession arrangements and are carried at cost,
which represents the fair value of the consideration paid on acquisition less accumulated amortisation and any impairment
losses. 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
Chicago Skyway
Estimated useful life
Period to February 2056
Period to September 2053
Period to November 2035
Period to December 2060
Period to January 2104
There has been no change to the estimated useful lives during the year, with the exception of the addition of the A79 concession
as part of APRR which extends to 2068.
In relation to APRR, ADELAC and Chicago Skyway, the tolling concessions are not recognised as intangible assets in the statement
of financial position but instead form part of the investments accounted for using the equity method. The amortisation of tolling
concessions relating to these non-controlled investments is included in the Groups’ share of the investee’s profit or loss.
Impairment
Tolling concessions recognised as intangible assets with finite useful lives 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
the impairment of non-financial assets.
Balance at the beginning of the year (a)
Amortisation of tolling concession
Foreign exchange movement
Balance at the end of the year
ALX
ATLAX Group
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
2,101,414
2,064,339
(64,313)
130,807
(60,039)
97,114
2,167,908
2,101,414
–
–
–
–
–
–
–
–
(a) In 2020, an impairment charge of $143.9 million was taken on the Dulles Greenway concession. In 2019, an impairment charge of $165.4 million was recorded on the
Dulles Greenway, comprising of $99.4 million tolling concession impairment expense and $66.0 million goodwill impairment expense.
ATLAS ARTERIA ANNUAL REPORT 2022 | 87
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS Key assumptions used for fair value less costs of disposal calculations – Dulles Greenway
Assumption
Approach used to determine values in 2022
Traffic volume
Based on historic trends and independent 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, employment within its catchment area and macroeconomic
assumptions which include the impact of changing social preferences and economic responses to
COVID-19.
Traffic during 2022 was impacted early in the year by the Omicron COVID-19 variant following which
return to work traffic has been more gradual than expected. In the short to medium term the increase
in remote and hybrid working arrangements in the region is expected to cause a prolonged recovery in
traffic.
Based on the Groups’ long-term internal forecasts and independent third-party projections, long-term
CPI rates are forecast to be around 2.3% per annum, with medium term forecasts up to 2.2% – 4.0% per
annum based on median consensus forecasts.
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).
The Groups’ long-term assumption forecasts toll rates to escalate in line with the range that has been
historically achieved on average since 2012. However, historical results provide no guarantee as new
legislation or regulatory decisions could impact future outcomes.
The discount rate of 9.5% 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 and the current tolling
regulatory framework.
Long term CPI
(% annual growth)
Average toll
(% annual growth)
Post-tax discount rate
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.
A significant adverse change in any of the key assumptions could result in the recoverable amount of the CGU falling below its
carrying amount. However, at 31 December 2022, there were no reasonably possible changes in key assumptions that could result
in the recoverable amount of a CGU falling below the carrying amount.
There is a complex interplay between the key assumptions, 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 5.4.6 for additional detail on the fair value hierarchy).
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 and joint ventures is included in the carrying amount of the equity
accounted investments.
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 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 notes 3.2 and 4.1 for additional details on the accounting policy for impairment.
ALX
ATLAX Group
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
13,719
102
13,821
14,091
(372)
13,719
–
–
–
–
–
–
Balance at the beginning of the year
Foreign exchange movement
Balance at the end of the year
88 | ATLAS ARTERIA ANNUAL REPORT 2022
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 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 on their financial 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
Total current other assets
Non-current
Other assets
Total non-current other assets
ALX
ATLAX Group
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
2,467
–
2,628
1,684
5,067
11,846
58
58
7,416
–
2,549
225
5,606
15,796
76
76
5,419
(12)
838
1,684
916
8,845
–
–
3,420
(11)
906
230
1,590
6,135
6
6
The Groups’ maximum credit exposure for receivables is the carrying amount. 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 amounts.
ATLAS ARTERIA ANNUAL REPORT 2022 | 89
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR 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.
The Groups record a provision for toll road maintenance required under their obligations within the service concession
arrangements for the maintenance and repair of the publicly owned roads they operate. The Groups at each period assess the
estimates of their present obligations, including assessment of the condition of the road determined from routine inspections.
These assessments inform the timing and extent of future maintenance activities.
Provisions included in the financial statements are measured at the present value of the best estimate of 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
Provision for toll road maintenance
Sundry creditors and accruals
Tax payables
Employee benefits
Lease liability (a)
Total current other liabilities
Non-current
Provision for toll road maintenance
Lease liability (a)
Total non-current other liabilities
ALX
ATLAX Group
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
3,079
14,552
442
5,257
316
2,674
8,083
357
5,100
447
–
9,309
47
4,074
644
23,646
16,661
14,074
36,425
25,458
61,883
25,977
24,486
50,463
–
2,880
2,880
–
2,756
–
3,922
718
7,396
–
3,596
3,596
(a) The corresponding right of use asset has been included in the property, plant and equipment balance.
The movement in the balance of provision for toll road maintenance is as follows:
ALX
ATLAX Group
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
28,651
10,153
(1,903)
1,344
1,259
39,504
22,426
8,138
(2,817)
453
451
28,651
–
–
–
–
–
–
–
–
–
–
–
–
Provision for toll road maintenance
Balance at the beginning of the year
Additional provision recognised
Provision utilised
Unwind of discount
Foreign exchange movement
Balance at the end of the year
90 | ATLAS ARTERIA ANNUAL REPORT 2022
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 minus directly attributable transaction costs and subsequently measured
at amortised cost using the effective interest method.
Current
Non-recourse TRIP II bonds and accrued interest thereon (a)
Total current debt at amortised cost
Non-current
Non-recourse TRIP II bonds and accrued interest thereon (a)
Non-recourse Warnow Tunnel borrowings (b)
Total non-current debt at amortised cost
ALX
ATLAX Group
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
100,113
100,113
92,300
92,300
1,433,039
1,357,123
176,407
174,938
1,609,446
1,532,061
–
–
–
–
–
–
–
–
–
–
(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 to settle these liabilities.
All of these bonds are in the form of fixed interest rate senior bonds, with US$35.0 million (2021: US$35.0 million) of Current Interest
Bonds and US$1,086.1 million (2021: US$1,085.5 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 to settle these liabilities.
In 2021 Warnow Tunnel repaid the legacy Warnow Tunnel debt facility of $217.9 million (€142.3 million) and entered into a new
$176.1 million (€115.0 million) debt facility (fixed and variable tranches) maturing in December 2049. As a result of extinguishing the
legacy debt facility at Warnow Tunnel a $50.3 million (€31.9 million) non-cash finance expense was recognised in the prior period.
Atlas Arteria has complied with all externally imposed capital requirements that it was subject to during 2022.
5.2 Contributed equity
Ordinary shares
Contributed equity
On issue at the beginning of the year
Issue of securities
Transaction costs associated with issue of securities
Attributable to ATLIX
securityholders
Attributable to ATLAX
securityholders
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
3,993,984
3,993,984
3,747,750
3,747,750
2,991,044
2,991,044
3,747,750
3,747,750
251,327
(5,093)
–
–
202,075
2,847,111
(58,142)
202,075
202,075
202,075
–
–
On issue at the end of the year
3,993,984
3,747,750
2,991,044
202,075
During the year ended 31 December 2022, the Groups undertook a $3,098.4 million Equity Raise comprising a fully underwritten
1 for 1.95 pro-rata accelerated non-renounceable entitlement offer to fund the Chicago Skyway acquisition. The Equity Raise resulted
in the issuance of 491.8 million new fully paid ordinary stapled securities. The new stapled securities were issued at a price of
$6.30 per security.
ATLAS ARTERIA ANNUAL REPORT 2022 | 91
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS On issue at the beginning of the year
Issue of securities
On issue at the end of the year
Attributable to ATLIX
securityholders
Attributable to ATLAX
securityholders
As at
31 Dec 2022
Number of
shares
$’000
As at
31 Dec 2021
Number of
shares
$’000
As at
31 Dec 2022
Number of
shares
$’000
As at
31 Dec 2021
Number of
shares
$’000
959,018
491,816
959,018
–
959,018
491,816
959,018
–
1,450,834
959,018
1,450,834
959,018
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.
5.3 Reserves
Share-based payments
Share-based compensation benefits are provided to employees via the short-term incentive (STI) Plan, the employee equity (EE)
Plan and the long-term incentive plan (LTIP).
Securities (equal to 50% of the value awarded to Executives) 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 benefits expense with a corresponding increase in equity. The
total amount expensed is determined based on the probability of the vesting conditions 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 benefits expense with a corresponding increase in equity. The total amount expensed is determined
based on the probability of the vesting conditions 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 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, based on the probability
of the vesting conditions being met.
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 and non-market performance conditions. It recognises the impact of the
revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
Associates
The associates reserve includes the share of the associates’ cash flow hedge and post-employment benefit obligations reserves.
The cash flow hedge reserve is used to recognise the associates’ effective portion of gains or losses on derivatives that are
designated and qualify as cash flow hedges. Amounts are subsequently recognised by the associates as a component of
borrowing costs when the hedged items affect the income statement.
The post-employment benefit obligations reserve is used to recognise the associates’ actuarial gains and losses resulting from
the effect of changes in actuarial assumptions and from experience adjustments. Amounts are not reclassified by the associates
to profit or loss in subsequent periods.
Hedging
The hedging reserve includes the cash flow hedge reserve. 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 or reclassified to profit or loss when the hedged transaction affects profit or loss.
Foreign currency translation reserve
Refer to note 7.5.3 for the policy regarding foreign currency translation.
92 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS Balance of reserves
Foreign currency translation reserve
Associates reserve
Share-based payments reserve
Balance at the end of the year
Movements of reserves
Foreign currency translation reserve
Balance at the beginning of the year
Exchange differences on translation of foreign operations
Balance at the end of the year
Associates reserve
Balance at the beginning of the year
Share of other comprehensive income of equity accounted investments
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
Transfer of hedging gains to carrying value of equity accounted investment
Balance at the end of the year
Share-based payments reserve
Balance at the beginning of the year
Employee equity based awards (a)
Balance at the end of the year
Attributable to ATLIX
securityholders
Attributable to ATLAX
securityholders
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
2,632
42,686
3,889
49,207
(44,043)
–
3,994
(40,049)
40,678
–
2,093
42,771
27,246
–
115
27,361
Attributable to ATLIX
securityholders
Attributable to ATLAX
securityholders
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
(44,043)
46,675
2,632
–
42,686
42,686
–
–
–
–
(10,706)
(33,337)
(44,043)
27,246
13,432
40,678
21,760
5,486
27,246
–
–
–
–
–
–
–
–
–
–
–
(25,012)
25,012
–
115
1,978
2,093
–
–
–
–
–
–
–
74
41
115
3,994
(105)
3,889
2,473
1,521
3,994
(a) Expenses arising from share-based benefits relating to the STI and the LTIP attributable to ATLIX securityholders as at 31 December 2022: ($0.1) million (2021:
$1.5 million). Expenses arising from share-based benefits relating to the STI and the LTIP attributable to ATLAX securityholders as at 31 December 2022: $2.0 million
(2021: $0.0 million).
ATLAS ARTERIA ANNUAL REPORT 2022 | 93
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR 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
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 hedging instruments.
If derivatives are not part of a designated hedging relationship, any changes in their fair value are recognised immediately in the
Consolidated Statement of Comprehensive Income.
Hedge effectiveness
Hedge effectiveness is assessed at the inception of the hedging relationship, and on an ongoing basis, to ensure that the qualifying
criteria for hedge accounting are met.
For hedges of foreign currency transactions, the Groups enter into hedging relationships where the critical terms of the hedging
instrument and the hedged item match or are closely aligned. The Groups therefore perform a qualitative assessment of hedge
effectiveness. In calculating the change in the value of the hedged item for the purpose of measuring hedge ineffectiveness,
the Groups use the hypothetical derivative method, which matches the critical terms of the derivative and the hedged item.
In hedges of foreign currency transactions, 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 the Groups or the derivative counterparties.
Chicago Skyway acquisition
On 13 September 2022, ATLAX and ATLIX entered into a combination of short-dated outright forward and deal contingent forward
contracts. These cash flow hedges were intended to mitigate foreign exchange risk associated with the US$2,057.1 million expected
future payments on completion of the Chicago Skyway acquisition. Hedge accounting has been applied to the eligible hedging
instruments, as the Groups judgement at the time of entering the hedging instruments was that the conclusion of the acquisition
was highly probable.
Deal contingent foreign exchange forward contracts
ATLAX designated the deal contingent forwards as hedging instruments and accounted for them as a cash flow hedge. Hedge
ineffectiveness for the deal contingent forward occurs due to the premium embedded in the forward rate for the contingency
component associated with the settlement of the Chicago Skyway acquisition. Settlement took place by 1 December 2022.
Under the terms of the deal contingent foreign exchange forward contracts, ATLAX purchased US$1,182.5 million at the weighted-
average AUD:USD exchange rate of 0.6830. This includes a deal contingency premium of $10.9 million recognised in profit or loss
during the year.
Short-dated outright foreign exchange forward contracts
ATLAX designated the short-dated outright forwards as hedging instruments and accounted for them as a cash flow hedge. ATLIX did
not designate the short-dated outright forward contract as a hedging instrument and accounted for it as a derivative measured at fair
value through profit or loss. Settlement took place on 13 October 2022. Under the terms of the short-dated outright forward
contracts, ATLAX purchased US$708.0 million at the weighted average AUD:USD exchange rate of 0.6865, and ATLIX purchased
US$166.7 million at the AUD:USD exchange rate of 0.6888.
94 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS 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 6 Euro cents (2021: 5 Euro cents)
− AUD/USD exchange rate increased/decreased by 10 US cents (2021: 7 US cents)
− AUD/GBP exchange rate increased/decreased by 5 UK pence (2021: 4 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.
Foreign exchange risk
ALX
Total financial assets (a)
Total financial liabilities (b)
Total
Appreciation in Australian Dollar
Depreciation in Australian Dollar
P&L
2022
$’000
(3,523)
969
(2,554)
P&L
2021
$’000
(1,167)
381
(786)
Equity
2022
$’000
Equity
2021
$’000
–
–
–
–
–
–
P&L
2022
$’000
4,382
(1,309)
3,073
P&L
2021
$’000
1,382
(460)
922
Equity
2022
$’000
Equity
2021
$’000
–
–
–
–
–
–
Foreign exchange risk
ATLAX Group
Total financial assets (a)
Total financial liabilities (b)
Total
Appreciation in Australian Dollar
Depreciation in Australian Dollar
P&L
2022
$’000
(1,209)
959
(250)
P&L
2021
$’000
(610)
369
(241)
Equity
2022
$’000
Equity
2021
$’000
–
–
–
–
–
–
P&L
2022
$’000
1,618
(1,284)
334
P&L
2021
$’000
731
(444)
287
Equity
2022
$’000
Equity
2021
$’000
–
–
–
–
–
–
(a) Financial assets include cash, cash equivalents, restricted cash, receivables, financial assets at amortised cost 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 financial instruments 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 126 bps (2021: 59 bps)
− Bank bill swap reference rate (EURIBOR 90 days) increased/decreased by 52 bps (2021: 12 bps)
− Bank bill swap reference rate (USD SOFR 90 days) increased/decreased by 158 bps (2021: 92 bps)
− Bank bill swap reference rate (EURIBOR 6 months) increased/decreased by 70 bps (2021: 15 bps)
− Bank bill swap reference rate (AUD BBSW 6 months) increased/decreased by 128 bps (2021: 59 bps)
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.
ATLAS ARTERIA ANNUAL REPORT 2022 | 95
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS ALX
Total financial assets
Total financial liabilities
Total
ATLAX Group
Total financial assets
Total financial liabilities
Total
P&L
2022
$’000
6,789
(317)
6,472
P&L
2022
$’000
742
–
742
Interest rate risk
Increase in interest rates
Decrease in interest rates
P&L
2021
$’000
3,478
(69)
3,409
Equity
2022
$’000
Equity
2021
$’000
–
–
–
–
–
–
P&L
2022
$’000
(6,789)
317
(6,472)
P&L
2021
$’000
(3,478)
69
(3,409)
Equity
2022
$’000
Equity
2021
$’000
–
–
–
–
–
–
Interest rate risk
Increase in interest rates
Decrease in interest rates
P&L
2021
$’000
232
–
232
Equity
2022
$’000
Equity
2021
$’000
–
–
–
–
–
–
P&L
2022
$’000
(742)
–
(742)
P&L
2021
$’000
(232)
–
(232)
Equity
2022
$’000
Equity
2021
$’000
–
–
–
–
–
–
5.4.4 Credit risk
The Groups’ exposure to credit risk arises from deposits with banks and financial institutions as well as receivables from associates,
joint ventures and governments. The Groups limit their exposure relating to cash balances by only dealing with well-established
financial institutions of high-quality credit standing. With the exception of the transactions in the normal course of business between
the ATLIX and ATLAX Groups, the Groups transact with independent 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 that may be subject to credit risk.
Financial
institutions
$’000
ALX
Corporates
and others
$’000
Total
$’000
Financial
institutions
$’000
ATLAX Group
Corporates
and others
$’000
275,899
215,575
–
–
–
–
–
7,534
275,899
215,575
7,534
245,766
245,766
1,684
1,684
62,034
–
–
–
–
491,474
254,984
746,458
62,034
–
–
6,335
–
1,684
8,019
Financial
institutions
$’000
ALX
Corporates
and others
$’000
Total
$’000
Financial
institutions
$’000
ATLAX Group
Corporates
and others
$’000
229,389
226,325
–
–
455,714
–
–
13,022
225
13,247
229,389
226,325
13,022
225
468,961
42,758
–
–
–
42,758
–
–
5,010
230
5,240
Total
$’000
62,034
–
6,335
–
1,684
70,053
Total
$’000
42,758
–
5,010
230
47,998
2022
Cash and cash equivalents
Restricted cash
Receivables – current
Financial assets at amortised cost
Tax receivables
Total
2021
Cash and cash equivalents
Restricted cash
Receivables – current
Tax receivables
Total
96 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS Financial institutions
The credit risk with 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 cash outflows for financial liabilities at the balance sheet date.
Less than
1 year
$’000
1-2 years
$’000
2-3 years
$’000
3-5 years
$’000
Greater
than
5 years
$’000
Total
contractual
cash flows
$’000
Carrying
Value
$’000
Fair
Value (a)
$’000
ALX
Financial Liabilities
2022
Debt at amortised cost (b)
100,113
100,237
101,749
208,063
3,598,071
4,108,233
1,709,559
1,569,047
Payables
Total
2021
24,941
3,531
5,956
14,303
107,708
156,439
85,529
85,529
125,054
103,768
107,705
222,366
3,705,779
4,264,672
1,795,088
1,654,576
Debt at amortised cost (b)
Payables
Total
92,300
17,992
99,465
100,948
206,211
3,332,397
3,831,321
1,624,361
1,771,532
3,987
3,478
5,723
103,387
134,567
67,124
67,124
110,292
103,452
104,426
211,934
3,435,784
3,965,888
1,691,485
1,838,656
Financial Liabilities
2022
Payables
Total
2021
Payables
Total
ATLAX Group
1-2 years
$’000
2-3 years
$’000
3-5 years
$’000
Greater
than
5 years
$’000
Total
contractual
cash flows
$’000
Carrying
Value
$’000
Fair
Value (a)
$’000
613
613
766
766
633
633
1,327
1,327
399
399
16,995
16,995
16,955
16,955
16,955
16,955
613
613
1,286
1,286
1,073
1,073
11,196
11,196
10,992
10,992
10,992
10,992
Less than
1 year
$’000
14,023
14,023
7,458
7,458
(a) Fair value approximates carrying amount for Payables.
(b) Includes consolidated debt held by TRIP II and Warnow Tunnel that is non-recourse to the Groups.
ATLAS ARTERIA ANNUAL REPORT 2022 | 97
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 5.4.6 Fair value measurement of financial instruments
The fair value measurements of financial assets and liabilities are categorised within the following fair value hierarchy:
(i) Level 1: Quoted prices (unadjusted) in active markets for identical assets or 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 may have derivative financial instruments that are measured at fair value on a recurring basis. These instruments are
entered into to minimise potential variations in cash flows resulting from fluctuations in interest rates and foreign currency and their
impact on 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 using Level 2 inputs and are revalued using externally provided dealer quotes.
The Groups’ policy is to recognise transfers between levels of the fair value hierarchy as at the end of the reporting period.
The Groups undertook a non-recurring fair value measurement over the CCPI shareholder loans acquired during the year, the fair
value was considered to be equal to the face value due to the short time to maturity of the financial asset.
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 the investments accounted for using
the equity method) and financial liabilities approximated their carrying amounts at 31 December 2022. 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 Tunnel borrowings
5.4.7 Capital management
The Groups’ capital management objectives are to:
Carrying amount
$’000
Fair value
$’000
1,533,152
1,443,244
176,407
125,803
− Ensure sufficient capital resources to support the Groups’ business, operational and growth requirements;
− Safeguard the Groups’ ability to continue as a going concern; and
− 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 as at
31 December 2022 or 31 December 2021.
98 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS
6 Group disclosures
6.1 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 ventures
Investments in subsidiaries, associates and joint ventures are accounted for at cost in the separate financial reports of ATLIX
and ATLAX.
Tax consolidation legislation
ATLAX and its Australian-resident wholly-owned 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
stand-alone taxpayer in its own right. In addition to its own current and deferred tax amounts, ATLAX also recognises current tax
liabilities (or assets) and deferred tax assets arising from unused tax losses and unused tax credits assumed from its controlled
entities in the tax-consolidated group.
The entities have also entered into a tax funding agreement under which the wholly owned controlled 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 controlled 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 the tax funding agreements 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.
6.1.1 Summary financial information
In accordance with the Corporations Regulations 2001, the individual Financial Reports for ATLIX and ATLAX are shown in aggregate
amounts below:
ATLIX
ATLAX
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
As at
31 Dec 2022
$’000
As at
31 Dec 2021
$’000
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
103,747
83,644
65,580
2,229,360
2,333,107
(6,789)
(211,094)
(217,883)
2,117,431
2,860,706
2,201,075
2,926,286
(5,401)
(7,480)
–
–
42,839
76,557
119,396
(3,504)
–
(5,401)
(7,480)
(3,504)
3,993,984
3,747,750
2,991,044
202,075
3,390
3,990
96
(1,882,150)
(1,556,066)
(72,334)
2,115,224
2,195,674
2,918,806
111
(86,293)
115,893
Profit/(loss) for the year
Total comprehensive income/(loss)
62,318
62,318
2,427
2,427
13,959
13,959
(11,038)
(11,038)
ATLAS ARTERIA ANNUAL REPORT 2022 | 99
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 6.1.2 Guarantees entered into by the parent entities
ATLIX and ATLAX had not provided any financial guarantees in respect of bank overdrafts and loans of their subsidiaries as at
31 December 2022 and 31 December 2021. ATLIX and ATLAX had not given any unsecured guarantees as at 31 December 2022 or
31 December 2021.
6.1.3 Contingent liabilities of the parent entities
ATLIX and ATLAX do not have any contingent liabilities as at 31 December 2022 or 31 December 2021.
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 value of the assets transferred, the liabilities incurred and the equity interests issued by the
Groups. The consideration transferred also includes the estimated 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 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.
100 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS 6.3.1 ALX
Name of controlled entity
Atlas Arteria Limited
ALX Infrastructure Australia Pty Limited
ALX Investments (Australia) Pty Limited
Atlas Arteria Holdings Australia Pty Ltd (a)
Atlas Arteria Service Co Pty Limited
Green Bermudian Holdings Limited
ALX Investments Limited
MIBL Finance (Luxembourg) Sarl
Atlas Arteria Luxembourg 1 Sarl
Tollway Holdings Limited (b)
European Transport Investments (UK) Limited
Tipperhurst Limited (c)
Greenfinch Motorways Limited (d)
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. (e)
Warnowquerung GmbH & Co. KG (f)
Warnowquerung Verwaltungsgesellschaft mbH (f)
Country of establishment
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
(a) Incorporated on 19 August 2022.
(b) In liquidation.
(c) In liquidation.
(d) Liquidated on 11 January 2022 and deregistered on 14 April 2022.
(e) 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.
(f) Warnowquerung GmbH & Co. KG and its general partner, Warnowquerung Verwaltungsgesellschaft mbH, (collectively ‘Warnow Tunnel’) manage the Warnow
Tunnel concession.
6.3.2 ATLAX Group
Name of controlled entity
ALX Infrastructure Australia Pty Limited
ALX Investments (Australia) Pty Limited
Atlas Arteria Holdings Australia Pty Ltd (a)
Atlas Arteria Service Co Pty Limited
ALX Indiana Holdings LLC
ALX Holdings (US) LLC
Dulles Greenway Partnership
Dulles Greenway Investments 3 (US) LLC
Shenandoah Greenway Corporation
(a) Incorporated on 19 August 2022.
Country of establishment
Voting %
Australia
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
ATLAS ARTERIA ANNUAL REPORT 2022 | 101
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 6.4 Related party disclosures
6.4.1 Directors
The following persons were Directors of ATLIX during the whole of the year and up to the date of this report:
(Chair)
− Jeffrey Conyers
− Fiona Beck
− Andrew Cook
− Caroline Foulger
− Debra Goodin
The following persons were Directors of ATLAX during the whole of the year and up to the date of this report
(unless otherwise stated):
− Debra Goodin
− Ariane Barker
− David Bartholomew
− Graeme Bevans
− Jean-Georges Malcor
− John Wigglesworth
(Chair)
(Retired on 31 December 2022)
(Appointed on 1 January 2023)
6.4.2 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 includes STI and LTIP components which include targets related to the performance of Atlas Arteria.
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
$
Total
remuneration
$
Total
2022
2021
2,442,925
1,276,221
971,061
1,198,196
2,596,948
1,605,652
1,026,634
910,585
58,971
62,018
5,947,374
6,201,837
Compensation in the form of directors’ fees that were paid to the ATLIX and ATLAX Non-Executive Directors is as follows:
Year ended 31 Dec 2022
Year ended 31 Dec 2021
Short term
benefit
Cash salary
and fees
$
989,909
891,204
Long term
benefit
Superannuation
$
Total
director fees
$
7,212
56,296
997,121
947,500
Short term
benefit
Cash salary
and fees
$
694,305
715,126
Long term
benefit
Superannuation
$
Total
director fees
$
8,706
51,714
703,011
766,840
ATLIX
ATLAX
102 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS The number of ALX stapled securities held directly, indirectly or beneficially by the KMP across the Groups at 31 December
is set out below:
Jeffrey Conyers
Ariane Barker (a)
David Bartholomew
Fiona Beck
Graeme Bevans
David Collins (b)
Andrew Cook
Caroline Foulger
Debra Goodin
Nadine Lennie (c)
Jean-Georges Malcor
Vincent Portal-Barrault
Total
KMP interests
in ALX stapled
securities
At 31 Dec 2022
KMP interests
in ALX stapled
securities
At 31 Dec 2021
90,524
38,124
31,679
53,029
59,838
13,600
25,214
25,853
443,258
229,659
–
33,000
41,602
76,667
–
45,499
90,942
944,324
–
20,000
21,000
50,678
65,265
30,076
66,087
607,270
(a) Appointed 1 March 2021 and retired 31 December 2022.
(b) Appointed 1 September 2022.
(c) Ceased 31 March 2022.
6.4.3 Other balances and transactions
At 31 December 2022, entities within the Groups had the following balances with related parties:
Shareholder loans with CCPI
Interest on shareholder loans with CCPI
ALX
ATLAX Group
Year ended
31 Dec 2022
$
Year ended
31 Dec 2021
$
Year ended
31 Dec 2022
$
Year ended
31 Dec 2021
$
245,766,181
1,719,714
–
–
–
–
–
–
Other intercompany receivables from/(payables) to related parties
747,114
7,415,729
5,419,345
3,419,895
During the year, entities within the Groups had the following transactions with related parties excluding associates and joint ventures:
ALX
ATLAX Group
Year ended
31 Dec 2022
$
Year ended
31 Dec 2021
$
Year ended
31 Dec 2022
$
Year ended
31 Dec 2021
$
Reimbursement of ATLIX's portion of expenses paid by ATLAX Group
Advisory and administrative service fees
Transfer of shareholder loans issued by CCPI
–
–
–
–
–
–
1,572,662
147,837
14,300,330
16,119,039
245,131,989
–
During the year, entities within the Groups received/(paid) the following from/(to) associates and joint ventures:
ALX
ATLAX Group
Year ended
31 Dec 2022
$
Year ended
31 Dec 2021
$
Year ended
31 Dec 2022
$
Year ended
31 Dec 2021
$
Distributions received from MAF2
406,888,038
307,841,820
–
–
Cash payments from/(to) associates and joint ventures (a)
8,767,562
2,847,010
(2,259,007)
(1,195,606)
(a) For Atlas Arteria the cash payments reflect fees and reimbursements from MAF and MAF2 offset by reimbursement to Skyway Concession Company LLC and for the
ATLAX Group the cash payments reflect reimbursements to TRIP II and Skyway Concession Company LLC.
All of the amounts represent payments on normal commercial terms made in relation to the provision of goods and services.
ATLAS ARTERIA ANNUAL REPORT 2022 | 103
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR 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
Share of (profit)/loss of equity accounted investments
Net finance costs
Depreciation and amortisation
Amortisation of tolling concession
Changes in operating assets and liabilities
Increase/(decrease) in deferred tax asset/(liability)
(Increase)/decrease in receivables
Increase/(decrease) in payables and other liabilities
Increase/decrease in maintenance provisions
Net cash inflow from operating activities
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
241,011
(336,380)
90,958
1,932
64,313
3,103
(3,350)
2,153
10,046
73,786
163,697
(284,051)
131,346
1,441
60,039
(35,767)
(698)
5,274
6,225
47,506
(25,948)
13,619
10,848
1,092
–
45
(2,443)
2,293
–
(494)
(19,512)
10,203
(106)
573
–
–
(1,063)
3,436
–
(6,469)
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.
ALX
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
275,899
215,575
(316)
(25,458)
(100,113)
229,389
226,325
(447)
(24,486)
(92,300)
(1,609,446)
(1,532,061)
62,034
42,758
–
(644)
(2,880)
–
–
–
(718)
(3,596)
–
–
(1,243,859)
(1,193,580)
58,510
38,444
275,899
215,575
229,389
226,325
(1,690,127)
(1,604,421)
(45,206)
(44,873)
62,034
42,758
–
(3,524)
–
–
(4,314)
–
(1,243,859)
(1,193,580)
58,510
38,444
Net (debt)/cash
Cash and cash equivalents
Restricted cash
Lease liabilities – current
Lease liabilities – non-current
Borrowings – current
Borrowings – non-current
Net (debt)/cash
Cash
Restricted cash
Gross debt – fixed interest rates
Gross debt – variable interest rates
Net (debt)/cash
104 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS
ALX
Net debt at 1 January 2021
Cash flows
Loan facilities
Lease principal payments
Other non-cash adjustments (a)
Foreign exchange adjustments
Net debt at 31 December 2021
Cash flows
Loan facilities
Lease principal payments
Other non-cash adjustments (a)
Foreign exchange adjustments
Net debt at 31 December 2022
Assets
Liabilities from financing
activities
Cash and cash
equivalents
$’000
Restricted
Cash
$’000
Borrowings –
current
$’000
Borrowings –
non-current
$’000
Total
$’000
260,341
(30,633)
224,089
(9,800)
–
–
–
–
–
–
(319)
12,036
(54,467)
(1,490,881)
(1,060,918)
–
75,476
(1,541)
(101,269)
(10,946)
–
41,264
–
(30,913)
(76,017)
(40,433)
116,740
(1,541)
(132,182)
(75,246)
229,389
226,325
(92,747)
(1,556,547)
(1,193,580)
41,571
(25,622)
–
–
–
–
–
–
4,939
275,899
14,872
215,575
–
97,245
(1,779)
(101,867)
(1,281)
–
–
–
13,020
(91,377)
15,949
97,245
(1,779)
(88,847)
(72,847)
(100,429)
(1,634,904)
(1,243,859)
(a) Relates to transfer of debt from non-current to current and unpaid interest that accrued during the year. The prior year also includes $50.3 million (€31.9 million)
non-cash finance expense incurred as a result of extinguishing the legacy debt facility at Warnow Tunnel.
ATLAX Group
Net cash at 1 January 2021
Cash flows
Foreign exchange adjustments
Net cash at 31 December 2021
Cash flows
Foreign exchange adjustments
Net cash at 31 December 2022
7.2 Contingent liabilities and capital commitments
The Groups have not made any material guarantees as of 31 December 2022.
Cash and cash
equivalents
$’000
52,130
(8,648)
(724)
42,758
18,818
458
62,034
Total
$’000
52,130
(8,648)
(724)
42,758
18,818
458
62,034
ATLAS ARTERIA ANNUAL REPORT 2022 | 105
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 7.3 Remuneration of auditors
Amounts paid or payable to PricewaterhouseCoopers
Australia for:
Audit and review services
Other assurance services (a)
Other services
Amounts paid or payable to Network firms
of PricewaterhouseCoopers for:
Audit and review services
Taxation services (b)
Amounts paid or payable to PricewaterhouseCoopers for:
Audit, review and other assurance services
Taxation and other services
Amounts paid or payable to non PricewaterhouseCoopers
audit firms for:
Audit services provided by Baker Tilly
GmbH Wirtschaftsprüfungsgesellschaft
Steuerberatungsgesellschaft ('Baker Tilly')
Audit services provided by Deloitte
Other non-audit services
ALX
ATLAX Group
Year ended
31 Dec 2022
$
Year ended
31 Dec 2021
$
Year ended
31 Dec 2022
$
Year ended
31 Dec 2021
$
740,212
714,017
–
1,454,229
810,000
–
25,000
835,000
403,220
668,276
–
1,071,496
408,750
–
25,000
433,750
438,808
95,450
534,258
420,967
97,545
518,512
44,335
48,387
–
–
44,335
48,387
1,893,037
1,230,967
1,115,830
95,450
122,545
–
1,988,487
1,353,512
1,115,830
457,137
25,000
482,137
86,482
44,178
39,658
170,318
78,040
–
9,053
87,093
–
44,178
19,037
63,215
–
–
–
(a) In the current year, other assurance services relate to Equity Raise due diligence and sustainability reporting reviews.
(b) 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.
106 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS 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 executive team, following determination of the STI amount, 50% is paid in cash and 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.
For the LTIP subject to the relative Total Securityholder Return (TSR) performance condition, the amount of performance rights that
will vest depends on Atlas Arteria’s relative TSR against the TSR performance of a peer group of companies approved by the Boards
and in respect of awards granted after 1 January 2021 there is an additional performance condition that requires Atlas Arteria’s
absolute TSR to be positive for the performance period.
For the LTIP introduced in 2022 subject to the achievement of Atlas Arteria’s strategic objectives, the amount of performance rights
that will vest depends on clearly quantifiable improvements in securityholder value from the implementation of two strategic metrics;
creating a clear pathway to sustainable cash flows from Dulles Greenway and improving the average concession life of the Atlas
Arteria portfolio. For the executive team, this requires Atlas Arteria’s absolute TSR to be positive for the performance period and the
business case for the acquisition of the Chicago Skyway to be achieved.
Performance rights are granted under the plans for no consideration. These performance rights are exercisable at no consideration
upon satisfaction of performance hurdles.
EE Plan
The EE Plan provides eligible employees (excludes 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
ATLIX Group
ATLAX Group
Year ended
31 Dec 2022
Number
of equity
instruments
Year ended
31 Dec 2021
Number
of equity
instruments
Year ended
31 Dec 2022
Number
of equity
instruments
Year ended
31 Dec 2021
Number
of equity
instruments
1,521,170
1,155,757
1,521,170
1,155,757
615,724
188,737
17,160
–
608,178
162,978
24,780
–
615,724
188,737
17,160
–
608,178
162,978
24,780
–
Securities exercised during the year under the STI Plan
(162,978)
(155,024)
(162,978)
(155,024)
Rights exercised during the year under the EE plan
Rights forfeited during the year under the LTIP
–
–
–
–
(484,282)
(270,846)
(484,282)
(270,846)
Securities forfeited during the year under the STI Plan
–
–
–
–
Rights forfeited during the year under the EE plan
(5,652)
(4,653)
(5,652)
(4,653)
As at 31 December
1,689,879
1,521,170
1,689,879
1,521,170
The performance conditions of the 2020 LTI performance rights were tested in January 2023. The performance conditions were not
satisfied at which time the rights were forfeited. LTI performance rights issued in 2021 that are outstanding at the end of the year will
vest after the end of the performance period which ends on 31 December 2023 only if performance conditions are met. LTI performance
rights issued in 2022 that are outstanding at the end of the year will vest after the end of the performance period which ends on
31 December 2024 only if performance conditions are met.
STI restricted securities issued in 2021 vested in December 2021. STI restricted securities issued in 2022 vested in December 2022
as the service conditions were met, however remain in a holding lock until the next trading window in 2023.
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 2022 range between $3.59
and $6.90 per performance right (2021: $2.95). The fair value at grant date is independently determined using an adjusted form of the
Stochastic 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 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.
ATLAS ARTERIA ANNUAL REPORT 2022 | 107
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS 7.4.2 Expenses arising from share-based payment transactions
Employee performance rights – LTIP
Employee performance rights – EE Plan
Employee securities – STI Plan
7.5 Other accounting policies
ATLIX Group
ATLAX Group
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
Year ended
31 Dec 2022
$’000
Year ended
31 Dec 2021
$’000
323
45
254
622
1,363
–
1,055
2,418
1,268
128
1,085
2,481
33
–
26
59
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 equity accounted investment are capitalised into the cost of the investment. 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 Goods and Services Tax (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 Statements 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, 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.
108 | ATLAS ARTERIA ANNUAL REPORT 2022
NOTES TO THE FINANCIAL REPORTS 7.6 Events occurring after balance sheet date
In February 2023, the ATLIX Group agreed to refinance the CCPI shareholder loans for the same nominal amount with an interest rate
of 7% per annum and maturity in February 2033. These loans will be reflected on the Atlas Arteria Statement of Financial Position as
a financial asset at amortised cost.
On 12 February 2023, the ATLAX Group agreed the final acquisition price with the sellers of the Chicago Skyway.
The Directors of ATLIX and ATLAX are not aware of any other matters or circumstances 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 the years subsequent to the year ended 31 December 2022.
ATLAS ARTERIA ANNUAL REPORT 2022 | 109
NOTES TO THE FINANCIAL REPORTSFINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS DIRECTORS’ DECLARATION – ATLAS ARTERIA
INTERNATIONAL LIMITED
The Directors of Atlas Arteria International Limited (ATLIX) declare that:
a) the Financial Report of ATLIX and its controlled entities (Atlas Arteria) and notes set out on pages 70 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 2022 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
Chair
Atlas Arteria International Limited
Hamilton, Bermuda
22 February 2023
Caroline Foulger
Director
Atlas Arteria International Limited
Hamilton, Bermuda
22 February 2023
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 70 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 2022 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
Chair
Atlas Arteria Limited
Melbourne, Australia
23 February 2023
John Wigglesworth
Director
Atlas Arteria Limited
Melbourne, Australia
23 February 2023
110 | ATLAS ARTERIA ANNUAL REPORT 2022
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
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:
(a) giving a true and fair view of the financial positions of Atlas Arteria and the ATLAX Group as at
31 December 2022 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 2022
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 significant accounting policies and other
explanatory information
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 the 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
financial reports in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
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
Liability limited by a scheme approved under Professional Standards Legislation.
ATLAS ARTERIA ANNUAL REPORT 2022 | 111
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS
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 roads, the most significant of which are:
31.14% interest in the APRR toll road group and a 31.17% interest in the ADELAC toll road
network in France (together “APRR”), an equity accounted investment;
66.7% interest in the Chicago Skyway toll road bridge (“Chicago Skyway”) in the USA, an
equity accounted investment;
100% economic interest in the Dulles Greenway in the USA (“Dulles Greenway”), which is
consolidated; and
100% interest in Warnowquerung GmbH & Co (“Warnow Tunnel”) in Germany which is
consolidated.
The ATLAX Group holds the following investments, both of which are equity accounted:
66.7% interest in Chicago Skyway; and
13.4% interest in Dulles Greenway.
We engaged with the auditors of APRR, Dulles Greenway, Chicago Skyway and Warnow Tunnel to
report to us in respect of their audit procedures performed on the relevant toll road businesses.
Materiality
Atlas Arteria materiality was $27.6 million, which represents approximately 2.5% of segment EBITDA
(earnings before interest, tax, depreciation and amortisation).
The ATLAX Group materiality was $26.6 million, which represents approximately 1% of its total assets.
We applied these thresholds, together with qualitative considerations, to determine the scope of our audit
and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on
the financial reports as a whole.
112 | ATLAS ARTERIA ANNUAL REPORT 2022
We used segment EBITDA as the materiality benchmark for Atlas Arteria as this reflects the performance
of the underlying businesses and the proportion of their results attributable to Atlas Arteria. We applied a
2.5% threshold based on our professional judgement, noting that this is in the range of commonly
acceptable thresholds.
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 interests
in Dulles Greenway and the Chicago Skway are recorded on its Statement of Financial Position as equity
accounted investments. We applied a 1% threshold based on our professional judgement, noting that this
is within a 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 instructions (component auditors). For APRR, Dulles Greenway, Chicago Skyway 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 visiting the operations, meeting with the component audit teams,
written instructions and reviewing a selection of component auditor 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 opinion 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
How our audit addressed the key audit matter
Carrying value of Atlas Arteria’s Dulles
Greenway tolling concession asset and the
ATLAX Group's investment in associate in
respect of Dulles Greenway
(Refer to notes 4.1 and 3.2)
Atlas Arteria has 100% economic interest in the
Dulles Greenway tolling concession, which is a
Cash Generating Unit (CGU). The tolling
concession intangible asset in respect of Dulles
Greenway is included in Atlas Arteria’s total tolling
concession intangible assets of $2.2 billion.
The ATLAX Group has an equity accounted
investment in the Dulles Greenway CGU of $97.2
million.
During the year Atlas Arteria and the ATLAX Group
performed an impairment assessment on the
carrying value of the CGU. The assessment of the
recoverable amounts of the assets were made on a
fair value less costs of disposal (FVLCD) basis,
using discounted cash flow models. No impairment
expense was recorded.
We performed the following procedures, amongst
others:
Assessed whether the composition of the
CGU was consistent with our knowledge of
Atlas Arteria and the ATLAX Group’s
operations.
Assessed whether the CGU appropriately
included all directly attributable assets and
liabilities.
Assessed that there were indicators of
impairment during the year for Dulles
Greenway, taking into consideration the
requirements of Australian Accounting
Standards.
Assessed whether the valuation
methodology, which utilised a discounted
cash flow model to estimate the recoverable
amount of the Dulles Greenway, was
consistent with the requirements of
Australian Accounting Standards.
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FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS
Key audit matter
How our audit addressed the key audit matter
These assessments involved significant
judgements, such as:
Forecasting future traffic volumes
Forecasting long-term inflation rates
Estimating toll price growth rates
Determining appropriate discount rate for
the CGU
The assessments of the carrying values of the
tolling concession asset for Atlas Arteria and the
investment in associates for the ATLAX Group
relating to Dulles Greenway were a key audit matter
due to the significant carrying value of these assets
and the judgements involved in developing
assumptions used in the discounted cashflow model
which determine the recoverable amount of the
CGU.
Assessed whether the forecast cash flows in
the impairment assessment 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 accurately
forecast traffic volumes 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 Dulles Greenway. 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
businesses and asset specific
characteristics.
Performed sensitivity analysis on the key
assumptions used in the impairment model.
Tested the mathematical accuracy of the
impairment model on a sample basis, and
Evaluated the adequacy of the disclosures
made in notes 4.1 and 3.2, in light of the
requirements of Australian Accounting
Standards.
114 | ATLAS ARTERIA ANNUAL REPORT 2022
Key audit matter
How our audit addressed the key audit matter
Consolidation of subsidiaries and equity
accounting of associates and joint ventures
(Refer to notes 3.2 and 5.3)
Atlas Arteria applies equity accounting to its
investments in APRR and Chicago Skyway and
consolidates its investments in Dulles Greenway
and Warnow Tunnel. The ATLAX Group applies
equity accounting to its investments in Dulles
Greenway and Chicago Skyway. 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 these assets.
In the application of equity and consolidation
accounting, management is required to make a
number of adjustments to the underlying financial
information of each business to ensure alignment to
Australian Accounting Standards and to Atlas
Arteria and the ATLAX Group’s accounting policies.
This is a key audit matter because certain of the
adjustments involved in the application of equity and
consolidation accounting are material and complex
in nature.
Such adjustments include:
adjusting the results of international
subsidiaries and investments in associates
and joint ventures prepared using local
accounting standards and policies to reflect
Australian Accounting Standards as
applied through the Atlas Arteria and the
ATLAX Group accounting policies
adjusting the results of equity investees to
reflect equity accounting adjustments
required to arrive at Atlas Arteria and the
ATLAX Group’s share of profits from
associates.
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 gained 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, Chicago Skyway and Warnow
Tunnel, we tested management’s calculations of the
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;
Atlas Arteria’s share of net profits from equity
accounted investments and the carrying
value of the equity accounted investments in
APRR and Chicago Skyway and
the ATLAX Group’s share of associates and
joint ventures net profits or losses and the
carrying values of Dulles Greenway and
Chicago Skyway.
We evaluated the adequacy of the disclosures made
in notes 3.2 and 5.3, in light of the requirements of
Australian Accounting Standards.
ATLAS ARTERIA ANNUAL REPORT 2022 | 115
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS
Key audit matter
How our audit addressed the key audit matter
Provision for toll road maintenance
(Refer to notes 3.2 and 4.4)
Atlas Arteria and the ATLAX Group have
investments in toll roads. These businesses hold a
contractual right under a concession agreement to
toll users of the roads in return for the capital and
expertise required to build, maintain and operate the
roads.
We obtained Atlas Arteria and the ATLAX Group’s
assessments of maintenance obligations under each
of the concession agreements. These assessments
include an estimate of the cost and timing of the
required maintenance activities, which forms the basis
of the models used to calculate the provision. We
evaluated these assessments in light of the
requirements of Australian Accounting Standards.
We evaluated and tested key assumptions utilised in
the models by performing the following procedures,
amongst others:
Evaluated the process by which the models,
including maintenance cost forecasts, were
developed.
Considered whether the relevant obligations
in the concession agreements were
appropriately reflected in the provision.
Compared forecast maintenance
expenditure to other information produced by
the Atlas Arteria and the ATLAX Group.
Compared previous cost forecasts to actual
expenditure incurred.
Assessed the appropriateness of the
estimated timing of the cash outflows and
asset life cycles with reference to third party
reports and Atlas Arteria’s maintenance
policy.
Considered the appropriateness of the
discount rates and inflation rates utilised in
the models by comparing them to current
market consensus rates, including long term
government bond yields and long-term target
inflation by governments in each location.
Checked the mathematical accuracy of the
models by reperforming a selection of
calculations therein.
We evaluated the adequacy of the disclosures made
in note 4.4, in light of the requirements of Australian
Accounting Standards.
Atlas Arteria and the ATLAX Group are subject to a
number of contractual obligations under the
concession agreements. The concession
agreements contain clauses that require the
concession holders of the Dulles Greenway, APRR,
Chicago Skyway and Warnow Tunnel to maintain
the toll roads to a specified standard and to return
the asset to the relevant authority in a certain
condition at the completion of the concession
period. This results in the recognition of provisions
for these contractual maintenance obligations.
The obligations for the Dulles Greenway and
Warnow Tunnel are included in the provision for toll
road maintenance of $39.5 million per note 4.4. The
obligations in respect of APRR form part of the
carrying value of Atlas Arteria’s equity accounted
investment. The obligations in respect of Chicago
Skyway form part of the carrying value of Atlas
Arteria and the ATLAX Group’s equity accounted
investments.
Estimating maintenance provisions requires
significant judgement and assumptions, including
the following:
The nature and extent of future
maintenance activities required
Forecast cash flows associated with these
future maintenance activities and timing of
when they will be required
The time period over which a maintenance
life cycle of each asset category is deemed
to be required
Discount rate and inflation rate applied to
future cash flows to bring them to their
present value.
We considered this to be a key audit matter due to
the judgement needed to assess the quantum of the
provision for toll road maintenance.
116 | ATLAS ARTERIA ANNUAL REPORT 2022
Key audit matter
How our audit addressed the key audit matter
Initial recognition of investment in Chicago
Skyway
(Refer to note 3.2) $2.8 billion
During the year, the ATLAX Group acquired a 67%
equity interest in the Chicago Skyway toll road. This
has been accounted for as a joint venture by Atlas
Arteria and the ATLAX Group, and the investment
was recognised at its acquisition cost of $2.8 billion.
The ATLAX Group entered into derivative contracts
to hedge the foreign currency risk on the purchase
price.
The accounting for the acquisition was a key audit
matter because it was a significant transaction for
Atlas Arteria and the ATLAX Group. The initial
recognition of the investment required accounting
judgements, including:
We considered the appropriateness of Atlas Arteria
and the ATLAX Group’s conclusions that the
investment in Chicago Skyway is a joint venture and
should be accounted under the equity method
notwithstanding the 67% ownership of the asset, in
light of the requirements of Australian Accounting
Standards. In doing so, we read and developed an
understanding of the key transaction agreements and
shareholder arrangements for the Chicago Skyway
asset.
We evaluated the application of hedge accounting to
the foreign exchange risk associated with this
transaction in the light of the requirements of
Australian Accounting Standards.
In relation to the cost of the investment, our
procedures included, amongst others:
The determination that the investment
should be accounted for as a joint venture
Read and understood the purchase and sale
agreement
Application of hedge accounting and
recognition of hedge gains and losses in
the cost of the investment
Determination of the cost of the investment
to be recognised, including directly related
transaction costs incurred by ATLAX.
Obtained evidence of cash paid to the
vendors
For a selection of transaction costs, we
obtained supporting evidence such as
purchase invoices.
Recalculated the gains on the foreign
derivatives recognised in the cost of the
investment
Other information
The directors are responsible for the other information. The other information comprises the
information included in the Annual Reports for Atlas Arteria and ATLAX for the year ended 31
December 2022, but does not include the financial reports and our auditor’s reports thereon.
Our opinion on the financial reports does 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.
ATLAS ARTERIA ANNUAL REPORT 2022 | 117
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS
Responsibilities of the directors for the financial reports
The directors of the ATLIX and ATLAX are responsible for the preparation of the 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 gives 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
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 opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audits 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.
118 | ATLAS ARTERIA ANNUAL REPORT 2022
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 48 to 69 of the directors’ report for the
year ended 31 December 2022.
In our opinion, the remuneration report of ATLIX and ATLAX for the year ended 31 December 2022
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 audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Ben Gargett
Partner
Melbourne
23 February 2023
ATLAS ARTERIA ANNUAL REPORT 2022 | 119
FINANCIAL REPORTREMUNERATION REPORTDIRECTORS’ REPORTSFINANCIAL OVERVIEWRISK AND GOVERNANCESUSTAINABILITYOUR BUSINESS
SECURITYHOLDER INFORMATION
As at 31 January 2023
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 parcel1
1. Minimum marketable parcel is $500.00 equating to 73 shares at $6.86 per security.
Twenty largest investors
Investor
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2 DIAMOND INFRACO 1 PTY LTD C/- THE TRUST COMPANY LTD
3
4
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
5 NATIONAL NOMINEES LIMITED
6 BNP PARIBAS NOMS PTY LTD
7 MUTUAL TRUST PTY LTD
8 NETWEALTH INVESTMENTS LIMITED
9 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
10 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
11 CITICORP NOMINEES PTY LIMITED
12 NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
13 DIAMOND INFRACO 1 PTY LTD
14 BNP PARIBAS NOMS (NZ) LTD
15 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
16 BNP PARIBAS NOMS PTY LTD
17 CUSTODIAL SERVICES LIMITED
18 WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED
19 INVIA CUSTODIAN PTY LIMITED
20 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
Holders
Total securities
% of issued
securities
10,036
7,853
2,308
2,000
99
22,296
2,202
3,656,550
19,794,374
16,554,361
45,894,693
1,364,933,729
1,450,833,707
49,019
0.25
1.36
1.14
3.16
94.08
100.00
0.00
Computershare Investor Services Pty Ltd
REGISTRY
GPO Box 2975
Melbourne VIC 3001
Australia
Telephone: (Australia) 1800 267 108
Telephone: (Overseas) +61 3 9415 4053
Mon-Fri 8.30am – 7pm AEST
Website: www.computershare.com/au
Facsimile: +61 (0) 3 9473 2500
Number of
securities
% of issued
securities
Clayton McCormack, General Counsel and Company Secretary
Paul Lynch, Joint Company Secretary
588,587,873
262,824,348
247,311,477
120,637,820
37,092,981
26,335,725
11,094,522
10,556,179
10,338,534
7,055,314
4,338,467
3,681,167
3,464,996
3,051,865
2,670,831
1,405,597
1,405,069
1,320,000
1,159,925
1,135,572
40.57
18.12
17.05
8.32
2.56
1.82
0.76
0.73
0.71
0.49
0.30
0.25
0.24
0.21
0.18
0.10
0.10
0.09
0.08
0.08
Total
1,345,468,262
92.74
Date of most recent substantial holder notice
Number of
securities
% of issued
securities
Details of substantial stapled securityholders
Holder
Vanguard Group
Blackrock Group
Diamond Infraco 1 Pty Ltd (IFM Group)
Lazard Asset Management
State Street Corporation
6 December 2021
29 September 2022
5 October 2022
6 October 2022
2 November 2022
First Sentier Investors Holdings Pty Limited
20 December 2022
Mitsubishi UFJ Financial Group, Inc.
22 December 2022
120 | ATLAS ARTERIA ANNUAL REPORT 2022
48,036,591
75,083,643
261,290,456
133,882,579
80,227,443
91,238,237
91,238,237
5.01%
5.51%
19.18%
9.83%
5.53%
6.29%
6.29%
FSC logo position
CORPORATE DIRECTORY
ATLAS ARTERIA LIMITED
Level 1, 180 Flinders Street
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, Independent Non-executive Chair
Graeme Bevans, Executive Director
David Bartholomew, Independent Non-executive Director
Jean-Georges Malcor, Independent Non-executive Director
John Wigglesworth, Independent Non-executive Director
Secretaries
ATLAS ARTERIA INTERNATIONAL LIMITED
4th Floor North, Cedar Avenue
41 Cedar Avenue
Hamilton HM12 Bermuda
Directors
Jeffrey Conyers, Independent Non-executive Chair
Fiona Beck, Independent Non-executive Director
Andrew Cook, Independent Non-executive Director
Caroline Foulger, Independent Non-executive Director
Debbie Goodin, Independent Non-executive Director
Secretary
Sheena Dottin
Photography Credits:
Page 1 – Chicago Skyway: MILLER+MILLER
Page 1 – APRR: Erolf-Productions
Page 1 – A79: H.Piraud
Page 3 – APRR: Phototec
Page 3 – ADELAC: Leimdorfer Gilles
Page 3 – Warnow Tunnel: Trent Perrett
Page 3 – Chicago Skyway: MILLER+MILLER
Page 9 – APRR: Leimdorfer Gilles
Page 9 – APRR: JamaisVu
Page 9 – Warnow Tunnel: Trent Perrett
Page 13 – A480: Christoph Weller
Page 15 – A79: Semaphore and Co
Page 17 – Warnow Tunnel
Page 3 – Dulles Greenway: David Madison Photography
Page 21 – Run the Greenway: Swim Bike Run Photo
Page 22 – APRR: Erolf Productions
Page 24 – Corporate Head Offi ce: Andrew Craig Photography
Page 25 – APRR: Erolf-Productions
REGISTRY
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne VIC 3001
Australia
Telephone: (Australia) 1800 267 108
Telephone: (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 1, 180 Flinders Street
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, Independent Non-executive Chair
Graeme Bevans, Executive Director
David Bartholomew, Independent Non-executive Director
Jean-Georges Malcor, Independent Non-executive Director
John Wigglesworth, Independent Non-executive Director
Secretaries
Clayton McCormack, General Counsel and Company Secretary
Paul Lynch, Joint Company Secretary
ATLAS ARTERIA INTERNATIONAL LIMITED
4th Floor North, Cedar Avenue
41 Cedar Avenue
Hamilton HM12 Bermuda
Directors
Jeffrey Conyers, Independent Non-executive Chair
Fiona Beck, Independent Non-executive Director
Andrew Cook, Independent Non-executive Director
Caroline Foulger, Independent Non-executive Director
Debbie Goodin, Independent Non-executive Director
Secretary
Sheena Dottin
Photography Credits:
Page 1 – Chicago Skyway: MILLER+MILLER
Page 1 – APRR: Erolf-Productions
Page 1 – A79: H.Piraud
Page 3 – APRR: Phototec
Page 3 – ADELAC: Leimdorfer Gilles
Page 3 – Warnow Tunnel: Trent Perrett
Page 3 – Chicago Skyway: MILLER+MILLER
Page 3 – Dulles Greenway: David Madison Photography
Page 9 – APRR: Leimdorfer Gilles
Page 9 – APRR: JamaisVu
Page 9 – Warnow Tunnel: Trent Perrett
Page 13 – A480: Christoph Weller
Page 15 – A79: Semaphore and Co
Page 17 – Warnow Tunnel
Page 21 – Run the Greenway: Swim Bike Run Photo
Page 22 – APRR: Erolf Productions
Page 24 – Corporate Head Offi ce: Andrew Craig Photography
Page 25 – APRR: Erolf-Productions
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