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Macquarie Korea I F (MKIF)

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Thursday 29 January, 2015

Macquarie Korea I F

Reports 2014 financial and performance results

RNS Number : 4827D
Macquarie Korea Infrastructure Fund
29 January 2015
 



 

MACQUARIE KOREA INFRASTRUCTURE FUND
REPORTS 2014 FULL YEAR FINANCIAL AND PERFORMANCE RESULTS

29 January 2015- Macquarie Korea Infrastructure Fund(MKIF) today announced its results for the financial year ended 31 December 2014 (the "Period"), together with the asset performance results for the same period. MKIF also advised that, according to the Articles of Incorporation of MKIF, a general meeting of shareholders for the Period will not be convened as there are no agenda requiring shareholders' approval.

 

Highlights for the Period include:

 

§ On a non-consolidated basis, MKIF recorded revenue and net income of KRW 181.2 billion and KRW 125.8 billion, respectively. Excluding the one-off items[1], the revenue and net income increased by 2.4% and 2.5%, respectively, compared to the previous corresponding period ("pcp")

 

§ The toll roads businesses delivered traffic volume and revenue[2] growth of 7.6% and 7.3%, respectively, on pcp. During the Period, the three newer toll road assets[3]have reached approximately 78.3% of the Concession Agreement forecast volume in 2014 compared to 75.2% on pcp

 

§  The results and outlook on the container terminal business, Busan new Port Phase 2-3 (BNP) include:

 

-       The New Port[4]grew 9.3% on pcp on approximately 12 million TEU of combined container handling volume from its five terminals

-       Based on a total volume of 1.41 million TEU, BNP delivered KRW 68.7 billion of revenues and KRW 22.4 billion of EBITDA for the Period, a growth of 25.5% and 224.5% on pcp, respectively

-       For FY2015, BNP targets a minimum of 1.72 million TEU and over KRW 91 billion of revenues

-     The capacity expansion is progressing as scheduled for completion in May 2015 (an increase from 1.8 to 2.5 million TEU per annum)[5]

-     Anticipates that the New Port's container handling volume will continue to grow with only BNP having meaningful level of capacity for next 4~5 years

-     BNP starts the year with lock-in volume of 1.3 million TEU for next 12 months

-       Cash management continues to be a key management priority during the ramp-up phase

 

§ In February 2014, MKIF refinanced its KRW 250 billion revolving credit facility for a new 5-year facility

-       Interest margin reduced by 90bps from 270bps to 180bps over the base rate of 91-day CD rate

-       Maturity extended by 2.7 years to February 2019

 

§ MKIF maintains a healthy financial position (as at 31 December 2014)

-       Proportionately consolidated cash balance[6]of KRW 296.3 billion

-       Continued de-gearing of asset level debt with a weight average maturity of 7.3 years, a decrease of 0.3 years on pcp

-       MKIF net debt of KRW 409.7 billion with no significant external financing needs until May 2018[7]

-       Proportionately consolidated gearing[8] of 36%, compared with 37% in pcp, with 60% of interest obligations fixed[9]

 

§ The Board of Directors of MKIF approved a second half of 2014 distribution of KRW 225 per share

-       The total distribution for the Period is KRW 418 per share, based on 331,459,341 total outstanding shares and one-off distribution of KRW 48 per share[10]

-       The second half distribution will be paid on 27 February 2015 to MKIF's shareholders as at the record date of 31 December 2014

 

§  Four local concession assets are undergoing legal disputes with the respective government authorities, as shown in the following table:

 

Assets

Case

Status

Government Authority

Baekyang Tunnel (BYTL)

Administrative order to reinstate the original capital structure from the time of the concession agreement signing

In October 2014, Busan District Court ruled in favour of BYTL and SICL. Busan City appealed the case to the Busan Appellate Court

Busan City

 

Soojungsan Tunnel (SICL)

Machang Bridge

(MCB)

International Chamber of Commerce arbitration process regarding KRW 13.1 billion of overdue support payment for 2013

KRW 13.0 billion of support payment and additional overdue interest was paid on 6 January 2015 and discussion is underway for settlement of the remaining overdue amount

Gyeongsangnam-do

Gwangju 2nd Beltway, Section 1 (KBICL)

Administrative order to reinstate the original capital structure from the time of the concession agreement signing

Undergoing the Supreme Court process

 

Gwangju City

Administrative order to suspend the MRG payment

KBICL plans to file a lawsuit for cancellation of the order

 

Mr. Chul Hum Paik, the representative director Macquarie Korea Asset Management, Co., Ltd., the manager of MKIF, said, "Despite the various challenges, MKIF has ended the year strongly and starts the year with a better prospect of operational and financial performance. MKIF remains fundamentally strong and we anticipate a repeat performance this year."

 

 "The underlying performance of the assets has been generally pleasing where all of MKIF's eleven toll road assets have recorded traffic growth last year, and its container terminal business, Busan New Port 2-3, has delivered three consecutive years of strong growth. This business is even better positioned to grow this year as the only terminal with significantly added capacity in already an extremely busy port.  With regards to the outstanding dispute with the government authorities, MKIF is proactively managing the issues with positive outcomes in Baekyang Tunnel and Soojungsan Tunnel litigations and ongoing win-win restructuring initiatives in other assets." 

 

"Another positive for the year comes from the fact that the underlying assets would increasingly  become dividend yielding as they gradually complete their external senior debt payments.  This means that MKIF's distribution capacity will improve from here on." 

 

"There are two areas of uncertainty in MKIF's business today, the litigations and BNP, the only non-MRG asset in the portfolio. These, therefore, will continue to be management priorities this year", added Mr. Paik. 

 

 A presentation providing further details of MKIF's 2014 financial and operating results and outlook can be found on MKIF's website (www.macquarie.com/mkif).

 

 

 

Financial Results1

                                                                                                                                                                                          (Unit: KRW million)


2014


2013

Revenue

181,243


212,907

Interest income

177,838


173,642

Capital gain

-


28,0193

Other income

3,4052


11,2464

Operating Expenses

55,418


54,217

Management fee5

30,803


30,810

Interest expense

19,629


19,746

Other expenses

4,986


3,661

Net Income

125,825


158,690

EPS

380


479

Normalised5 Net Income

122,439


119,425

Normalised EPS6

370


360

1.     Audited, non-consolidated basis

2.     One-off gains from the liquidation dividend from the CNEC ABS SPC (tranche 3) and commitment fee income from Cash Deficiency Support Facility ("CDS") for BNP

3.     One-off gain from the divestment of Seoul Subway Line 9 Section1

4.     One-off gain from the liquidation dividend from the CNEC ABS SPC (tranche 1 and tranche 2)

5.     Management Fee consists of Base Fee and Performance Fee.  There was no Performance Fee for the Period

6.     Excludes one-off gains

7.     Based on the number of shares outstanding of 331.5 mil shares

 

 

Traffic Results

 


2014 4th  Quarter (PCP)

2014  Full Year (YoY)

Asset

Traffic (%)

Revenue (%)

Traffic (%)

Revenue (%)

Weighted Average growth1

7.7%

7.7%

7.6%

7.3%

1.  On a weighted average basis based on revenue size of each asset and the MKIF's equity interest in each concession company.

 

 

For further information, please contact:

 

Jason Pak

Chief Operating Officer

Macquarie Korea Infrastructure Fund

+ 82 2 3705 8550

[email protected]

 

Ally An

Investor Relations

Macquarie Korea Infrastructure Fund

+ 82 2 3705 8565

[email protected]

 

This release is not an offer or solicitation for sale of the securities of Macquarie Korea Infrastructure Fund ('MKIF') in the United States or in any jurisdiction where any offer, sale or solicitation in respect of such securities is not permitted. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or in any jurisdiction where such offer or sale is not permitted. The securities of MKIF have not been registered under the Securities Act, and may not be offered or sold in the United States absent registration or exemption from registration under the Securities Act. There will be no public offer of the securities in the United States. 

Not for distribution in the United States or in any jurisdiction where any offer, sale or solicitation in respect of the contemplated securities is not permitted.

This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). Any securities will only be available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire any securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

This release does not take into account the investment objectives, financial situation and particular needs of the investor. Before making an investment in MKIF, the investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary.

MKIF or Macquarie Korea Asset Management Co., Ltd. (MKAM) is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of this entity do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities.

Investments in MKIF are subject to investment risk, including possible delays in repayment or loss of income and/or capital investment. Neither MKIF, nor any member of the Macquarie Group companies, including MKAM, guarantees the performance of MKIF, the repayment of capital or the payment of a particular rate of return on MKIF securities.


Appendix 1. Financial results1 

 

Financial Position Statements

As of 31 December 2014 and 2013

 

                                                                                                                                       (Unit: KRW million)



2014


2013

Assets





Invested Assets

1,681,571


1,637,919


Cash & deposits

48,864


14,751


Loans

1,079,604


1,090,065


Equity securities

553,103


533,103


Others

462,936


404,246


Interest receivable

455,070


394,913


Other receivables

2,368


2,947


Deferred costs, net

5,498


6,386

Total Assets

2,144,507


2,042,165






Liabilities





Accounts Payable

1


251


Management fee payable

8,277


7,400


Long-term debt

208,565


68,581


Bond

249,510


249,333


Other liabilities

1,636


1,503

Total Liabilities

467,989


327,068






Shareholders' Equity





Share Capital

1,670,986


1,670,986


Retained Earnings

5,532


44,111

Total Shareholders' Equity

1,676,518


1,715,097

Total Liabilities and Shareholders' Equity

2,144,507


2,042,165

 

1.     Audited, non-consolidated basis

 

 

 



 

Statements of Income

For the years ended 31 December 2014 and 2013

         

                                                                                                                                   (Unit: KRW million)


2014


2013

Revenue

181,243


212,907

Interest income

177,838


173,642

Gain on sale of investment

-


28,0192

Dividend income

3,3861


11,2463

Other income 


-

Expenses


54,217

Management fees

30,803


30,810

Custodian fees

332


335

Administrator fees

207


209

Interest expenses

19,629


19,746

Other expenses


3,117

Net Profits

125,825


158,690

 

1.     One-off gain from the liquidation dividend from the CNEC ABS SPC (tranche 3)

2.     One-off gain from the divestment of Seoul Subway Line 9 Section 1

3.     One-off gain from the liquidation dividend from the CNEC ABS SPC (tranche 1 and tranche 2)

 



Statements of Cashflow

For the years ended 31 December 2014 and 2013

         

                                                                                                                                   (Unit: KRW million)


2014


2013

Cash flows from operating activities:





Cash inflows from operating activities

120,726


254,526


Sale of investment

-


131,404


Collection of other loans receivable

19,013


8,470


Interest and other income

101,713


114,652


Cash outflows from operating activities:

(40,546)


(68,737)


Investments

(8,600)


(36,000)


Fees and expenses

(31,946)


(32,737)

Net cash provided by (used in) operating activities

80,180


185,789

Cash flows from financing activities:





Repayment of long-term debt

(200,305)


(155,000)


Drawdown from long-term debt

334,800


132,500


Distributions paid

(164,404)


(155,786)


Interest expense

(13,808)


(13,467)


Borrowing related expenses

(2,350)


(100)

Net cash provided by (used in) financing activities

(46,067)


(191,853)

Net increase(decrease) in cash and deposits

34,113


(6,064)

Cash and deposits at beginning of the period

14,751


20,815

Cash and deposits at end of the period

48,864


14,751



Appendix 2. Traffic Results

 

1.       Traffic and Revenue - Portfolio Summary

 

On a weighted average basis[11], traffic and revenue increased by 7.6% and 7.3%, respectively, during the Period, when compared to pcp. On the same basis, both traffic and revenue for the fourth quarter (the Quarter) increased by 7.7% on pcp.

 

§  Traffic growth of the portfolio during the Period was largely attributable to:

-      The three newer toll road assets[12] delivered stable traffic ramp-up of 8.1% growth on pcp

-      Traffic for Incheon International Airport Expressway and Incheon Grand Bridge increased due to increased population in Cheongna and Yeongjong area and higher number of airport users travelling the road

-      Traffic volume of Machang Bridge increased significantly of 53.2% during the Period on pcp due to the new road connection (Yanggok-Wanam route of the national highway and Changwon-Busan Expressway: stage 2) from 13 October 2013 

 

Traffic for each toll road asset is calculated as the annual average daily traffic volume. Except as stated otherwise, revenues for each toll road asset represents actual average daily revenue collected (excluding VAT). Actual revenue collected does not include minimum revenue guarantee compensation payments received from the relevant government authority or the toll freeze compensations related to the CPI growth. Accordingly, revenue performance in the concession companies is not a direct guide to the revenue performance of MKIF. 

 

The revenue growth recorded by the concession companies in which MKIF invests reflects traffic volume growth, as well as inflation linked toll rate increases, and may also be influenced by changes to the traffic mix, between heavy and light vehicles, for which different toll rates apply.

 


2014 Fourth Quarter

2014 Year to Date

% of MKIF

Portfolioc

Asset

Traffic (%)a

Revenue (%)b

Traffic (%)a

Revenue (%)b

Incheon International Airport Expressway

11.3%

9.4%

10.2%

5.9%

6.7

Baekyang Tunnel

2.9%

3.1%

1.7%

1.9%

0.2

Gwangju Second Beltway, Section 3-1

3.0%

3.0%

2.0%

2.0%

4.2

Gwangju Second Beltway, Section  1

5.8%

6.1%

4.9%

5.4%

12.9

Woomyunsan Tunnel

4.9%

5.1%

5.7%

5.7%

1.3

Cheonan-Nonsan Expressway

4.6%

5.0%

4.8%

5.3%

16.5

Soojungsan Tunnel

7.8%

8.0%

5.4%

5.5%

5.8

Machang Bridge

40.4%

41.1%

53.2%

54.6%

6.9

Yongin-Seoul Expressway

7.7%

7.7%

7.4%

7.5%

8.3

Seoul-Chuncheon Expressway

3.6%

3.5%

3.2%

3.3%

8.3

Incheon Grand Bridge

11.8%

11.0%

12.6%

11.9%

10.0

7.7%

7.7%

7.6%

7.3%


a. Percentage increase from prior corresponding period, based on average daily traffic

b. Percentage increase from prior corresponding period, based on average daily revenue

c. Percentage based on total commitments by MKIF to all investments in the MKIF portfolio

                                                  



2.         Traffic and Revenue - Individual Concession Company Performance

 

Incheon International Airport Expressway

 

Category

PCP

Year on Year

Q4 2013

Q4 2014

% Change

2013

2014

% Change

Average daily traffic (vehicles / day)

55,474

61,766

11.3%

54,858

60,467

10.2%

Average daily revenue (1,000 won)

341,230

373,331

9.4%

347,812

368,479

5.9%

Note:      Toll rates (small vehicle: from KRW 8,000 to KRW 7,600) were discounted to reflect the new traffic inflow from Cheongra IC opened in July 2013 and as a result traffic revenue growth was lower than volume growth

 

Baekyang Tunnel

 

Category

PCP

Year on Year

Q4 2013

Q4 2014

% Change

2013

2014

% Change

Average daily traffic (vehicles / day)

73,420

75,536

2.9%

72,324

73,587

1.7%

Average daily revenue (1,000 won)

52,692

54,310

3.1%

51,844

52,816

1.9%

 

Gwangju Second Beltway, Section 3-1

 

Category

PCP

Year on Year

Q4 2013

Q4 2014

% Change

2013

2014

% Change

Average daily traffic (vehicles / day)

34,418

35,442

3.0%

33,420

34,092

2.0%

Average daily revenue (1,000 won)

36,406

37,508

3.0%

35,292

36,009

2.0%

 

Gwangju Second Beltway, Section 1

 

Category

PCP

Year on Year

Q4 2013

Q4 2014

% Change

2013

2014

% Change

Average daily traffic (vehicles / day)

40,665

43,006

5.8%

40,008

41,974

4.9%

Average daily revenue (1,000 won)

42,872

45,485

6.1%

42,035

44,287

5.4%

Note:       Traffic and revenue increased compared to pcp due to the increase in the traffic inflow from a connecting road from Kwangju to Hwasoon, which opened in October 2013

 

Woomyunsan Tunnel

 

Category

PCP

Year on Year

Q4 2013

Q4 2014

% Change

2013

2014

% Change

Average daily traffic (vehicles / day)

27,228

28,565

4.9%

25,648

27,010

5.7%

Average daily revenue (1,000 won)

58,804

61,785

5.1%

55,393

58,551

5.7%

Note:       Traffic and revenue increased compared to pcp due to additional traffic from Woomyun area residence from completion of a new apartment complex

 



Cheonan-Nonsan Expressway

 

Category

PCP

Year on Year

Q4 2013

Q4 2014

% Change

2013

2014

% Change

Average daily traffic (vehicles / day)

45,521

47,629

4.6%

44,785

46,950

4.8%

Average daily revenue (1,000 won)

380,642

399,506

5.0%

372,580

392,258

5.3%

Note:       Traffic and revenue increased compared to pcp due to growing traffic inflow from Nam-Pungse IC opened in July 2014

 

Soojungsan Tunnel

 

Category

PCP

Year on Year

Q4 2013

Q4 2014

% Change

2013

2014

% Change

Average daily traffic (vehicles / day)

44,302

47,763

7.8%

43,409

45,761

5.4%

Average daily revenue (1,000 won)

32,346

34,933

8.0%

31,662

33,419

5.5%

Note:      Traffic and revenue increased compared to pcp mainly due to opening of Hi-Pass toll collection system in January 2014

 

Machang Bridge

 

Category

PCP

Year on Year

Q4 2013

Q4 2014

% Change

2013

2014

% Change

Average daily traffic (vehicles / day)

20,577

28,888

40.4%

17,009

26,054

53.2%

Average daily revenue (1,000 won)

45,983

64,875

41.1%

37,599

58,128

54.6%

Note:       Traffic and revenue increased significantly compared to pcp due to the new road connection, which opened on 13 October 2013

 

Yongin-Seoul Expressway

 

Category

PCP

Year on Year

Q4 2013

Q4 2014

% Change

2013

2014

% Change

Average daily traffic (vehicles / day)

74,808

80,559

7.7%

70,603

75,856

7.4%

Average daily revenue (1,000 won)

134,112

144,488

7.7%

126,531

136,019

7.5%

Note:      Average daily traffic volume up to the end of Quarter and the Period was 87% and 82% of CA forecast, respectively. 

 

 

Seoul-Chuncheon Expressway

 

Category

PCP

Year on Year

Q4 2013

Q4 2014

% Change

2013

2014

% Change

Average daily traffic (vehicles / day)

38,890

40,272

3.6%

39,763

41,020

3.2%

Average daily revenue (1,000 won)

247,151

255,906

3.5%

251,815

260,182

3.3%

Note:      Average daily traffic volume up to the end of Quarter and the Period was 73% and 79% of CA forecast, respectively. 

 

 

Incheon Grand Bridge

 

Category

PCP

Year on Year

Q4 2013

Q4 2014

% Change

2013

2014

% Change

Average daily traffic (vehicles / day)

31,657

35,402

11.8%

30,990

34,909

12.6%

Average daily revenue (1,000 won)

165,037

183,241

11.0%

161,047

180,235

11.9%

Note:      Average daily traffic volume up to the end of Quarter and the Period was 76% and 75% of CA forecast, respectively.

 

 

3.         Prior Period Compensation Payments Received from Government Authorities

 

The concession companies may receive revenue compensation payments from the relevant government authority in addition to revenue received from traffic. Generally, revenue compensation and other compensation payments are received within 6 to 18 months after the end of the year to which they relate.

 

There are outstanding MRG receivables for the remaining to be paid for some of the assets and negotiation is underway with the relevant government authorities to expedite the overdue payments.

(Unit: KRW million)

Asset Name

MRG  receivable for 2013

Outstanding amount1

Amount

   Received        amount

Due date without
additional interest

Incheon International Airport Expressway

101,838

97,547

February 2015

4,292

Baekyang Tunnel

6,351

3,678

April 2014

7,8462

Gwangju Second Beltway, Section 1

21,113

-

December 2014

41,3743

Gwangju Second Beltway, Section 3-1

6,430

6,430

December 2014

-

Woomyunsan Tunnel

5,605

-

February 2014

12,5734

Cheonan-Nonsan Expressway

52,184

37,051

February 2015

15,133

Soojungsan Tunnel

11,827

10,884

April 2014

2,8045

Machang Bridge

13,087

12,953

February 2014

1346

Yongin-Seoul Expressway

7

-

February 2015

7

Seoul-Chuncheon Expressway

9,833

5,900

February 2015

3,933

Incheon Grand Bridge

13,830

-

February 2015

13,830

1. Including all unpaid and overdue compensations

2. Unpaid amount from 2010 to 2013 (2010: 1,894mil, 2011: 1,321mil, 2012: 1,958mil, 2013: 2,673mil). Deferred interest is currently in effect and payment of the remaining amount is under negotiation with Busan Metropolitan City (BMC)

3. Unpaid amount of 2012 and 2013 (2012: 20,261mil, 2013: 21,113mil) Gwangju Second Beltway, Section 1 (KBICL) received an administrative order from Gwangju Metropolitan City (GMC) notifying it of the suspension of MRG payment(the Order). KBICL plans to file a lawsuit for cancellation of the order

4. Unpaid amount from 2011 to 2013 (2011: 2,713mil, 2012: 4,255mil, 2013:5,605mil). Deferred interest is currently in effect and payment of the remaining amount is under negotiation with Seoul Metropolitan City

5. Unpaid amount from 2011 to 2013 (2011: 935mil, 2012: 926mil, 2013: 943mil).  Deferred interest is currently in effect on the remaining amount and negotiation is underway with BMC

6. Machang Bridgeentered into an ICC arbitration process on 18 Sep in relations to MRG payment delay fromthe Provincial Government of Gyeongsangnam-do (GSND). On 6 January, GSND paid KRW 13.0bil of unpaid MRG



[1].   2013: the liquidation dividend from the Cheonan-Nonsan Expressway(CNEC)ABS SPC (tranche 1 and tranche 2)  and the divestment of  Seoul Subway Line 9 Section1
2
014: the liquidation dividend from the CNECABS SPC (tranche 3)

[2].   On a weighted average basis based on revenue size of each asset and the MKIF's equity interest in each concession company

[3].   Yongin-Seoul Expressway, Seoul-Chuncheon Expressway and Incheon Grand Bridge

[4] .   Five container terminals of the Busan New Port including BNP 

[5].    Handling capacity for 2015 is estimated at 2.2mil TEU as the construction is expected to completeby May 2015

[6].   Proportionately consolidated cash balance (including MKIF cash balance of KRW48.9bn)

[7].    KRW 60billion 5-year fixed rate bonds scheduled to mature in May 2016

[8].    Gearing = MKIF Net Debt/( MKIF Net Debt + MKIF market capital(3-month average)), where MKIF Net Debt = Proportionate net debt from assets + Corporate net debt. Excludes shareholder loans

[9].   Hedging (Fixed) = Proportionately consolidated MKIF net debt adjusted for fixed debt / Proportionately consolidated MKIF net debt

[10]. One-off dividend includes one-off gains (KRW 10 per share)and higher taxable income than accounting income (KRW 38per share)

[11]. On a weighted average basis based on revenue size of each asset and the MKIF's equity interest in each concession company

[12]. Yongin-Seoul Expressway, Seoul-Chuncheon Expressway and Incheon Grand Bridge


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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