RNS Number : 8037V
Macquarie Korea Infrastructure Fund
31 October 2014
31 October 2014
MACQUARIE KOREA INFRASTRUCTURE FUND
REPORTS THIRD QUARTER 2014 FINANCIAL AND PERFORMANCE RESULTS
Macquarie Korea Infrastructure Fund ("MKIF") today announced itsfinancial resultsfor the 3rd quarter ended 30 September 2014 (the "Quarter"), together with the asset performance results for the same period.
Highlights for the Quarter include:
On a non-consolidated basis, MKIF recorded revenue and net income of KRW 45.0 billion and KRW 30.4 billion, up 2.2% and 0.1% respectively, compared to the previous corresponding period ("pcp")
On a weighted average basis[1], actual traffic volume and revenues of the underlying assets increased compared to pcp by 8.2% and 8.2%, respectively. During the Quarter, the three newer toll road assets[2] have reached approximately 84.8% of the Concession Agreement forecast volume compared to 81.5% in the pcp
Key operational highlightsof Busan New Port Phase 2-3 ("BNP") include[3]:
- In the first nine months of 2014, the throughput volume of the five container terminals of the Busan New Port[4](the "New Port") grew 10.0% compared to pcp, achieving approximately 91.6% of capacity utilisation rate on a volume of 8.88 million TEUs
- BNP delivered 0.36 million TEUs in the Quarter, a 22% growth compared to pcp and a 4.7% growth compared to the previous quarter.This is mainly attributable to market volume growth in the New Port as well as migration of existing volumes from the North Port Higher volume is anticipated for the next quarter with the estimated full-year volume and revenue of approximately 1.45 million TEUs and KRW 70 billion. The estimate has been slightly revised down to reflect the short-term impact from the break-up of the previously proposed "P3" alliance - global vessel sharing alliance of the top three shipping lines, Maersk, MSC and CMA CGM
- Construction forBNP's capacity expansion is on track for completion by around May 2015. BNP's handling capacity will be increased from 1.8 mil to 2.5 mil TEUs per annum
MKIF maintains a healthy financial position:
- Proportionately consolidated cash balance[5] of KRW 220.2 billion
- Continued de-gearing of asset-level debt with a weighted average maturity of 7.5 years
- MKIF net debt of KRW 421.5 billion with no significant external financing needs until May 2018[6]
- Proportionately consolidated gearing[7] of 38% with 62% of interest obligations at fixed rates[8]
Four local concession assets of MKIF are undergoing legal disputes with the respective government authorities. The key developments include:
- On 18 September 2014, Machang Bridge initiated an International Chamber of Commerce ("ICC") arbitration process to claim overdue payments from the Provincial Government of Gyeongsangnam-do ("GSND")
- On 10 October 2014, Busan District Court ruled in favour of Baekyang Tunnel and Soojungsan Tunnel
MKIF Litigation Summary
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)
KRW 13.1billion of overdue MRG payment
In September 2014, MCB initiated an ICC arbitration process to claim the overdue MRG payment. Under normal circumstances, the arbitration award is expected within 12 months
GSND
Gwangju 2nd Beltway, Section 1 (KBICL)
Administrative order to reinstate the original capital structure from the time of the concession agreement signing
Undergoing the Seoul Supreme Court process
Gwangju City
Administrative order to suspend the MRG payment
Undergoing the Central Administration Appeals Commission process and anticipate ruling in November 2014
Financial Results
(Unit: KRW million)
Quarter to 30 September 2014
Quarter to 30 September 2013
Revenue
45,011
44,038
Interest income
45,001
44,038
Other income
101
-
Operating Expenses
14,614
13,659
Management fee
7,996
7,902
Interest expense
5,058
5,194
Other expenses
1,560
563
Net Income
30,397
30,379
EPS (KRW)2
91.7
91.7
1. Commitment fee income from Cash Deficiency Support Facility ("CDS") for BNP
2. Based on the number of shares outstanding of 331.5 mil shares
Traffic Results
2014 3rd Quarter
2014 Year to Date
Asset
Traffic (%)1
Revenue (%)2
Traffic (%)1
Revenue (%)2
Weighted average growth
8.2%
8.2%
7.6%
7.2%
1. Percentage increase from prior corresponding period, based on average daily traffic volume
2. Percentage increase from prior corresponding period, based on average daily revenue
For further information, please contact:
Jason Pak Chief Operating Officer Macquarie Korea Infrastructure Fund + 82 2 3705 8550 Jason.Pak@macquarie.com
Ally An Investor Relations Macquarie Korea Infrastructure Fund + 82 2 3705 8565 Ally.An@macquarie.com
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.
This release contains forward-looking statements. All forward-looking statements are our management's present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
Appendix1. Financial results (Unaudited, non-consolidated basis)
Statements of Financial Position
As at 30 September 2014, 30 June 2014 and 31 December 2013
(Unit: KRW millions)
30 September 2014
30 June 2014
31 December 2013
Assets
.Invested Assets
1,679,551
1,658,766
1,637,919
Cash & deposits
34,942
15,196
14,751
Loans receivable
1,091,506
1,090,467
1,090,065
Equity securities1
553,103
553,103
533,103
.Others
430,919
418,650
404,246
Interest receivables
422,837
409,589
394,913
Other receivables
2,358
2,347
2,947
Deferred costs, net
5,724
6,714
6,386
Total Assets
2,110,470
2,077,416
2,042,165
Liabilities
Accounts payables
1
1
251
Management fee payable
7,996
7,396
7,400
Other liabilities
1,555
1,444
1,503
Long-term debt
206,430
140,557
68,581
Bond
249,466
249,421
249,333
Total Liabilities
465,448
398,819
327,068
Shareholders' Equity
Share Capital
1,670,986
1,670,986
1,670,986
Retained Earnings
(25,964)
7,611
44,111
Total Shareholders' Equity
1,645,022
1,678,597
1,715,097
Total Liabilities and Shareholders'Equity
2,110,470
2,077,416
2,042,165
1. Pursuant to the Financial Investment Services and Capital Market Act, MKIF reports all its unlisted equity investments at acquisition cost. These are unaudited numbers and as such may be subject to change
Statements of Income
For the quarters ended 30 September 2014 and 30 September 2013
(Unit: KRW million)
Quarter Ended 30 Sept 2014
Quarter Ended 30 Sept 2013
. Revenue
45,011
44,038
Interest income
45,001
44,038
Other income
10
-
. Expenses
14,614
13,659
Management fees
7,996
7,902
Custodian fees
83
84
Administrator fees
52
52
Interest expense
5,058
5,194
Other expenses
1,425
427
. Net Income
30,397
30,379
Appendix 2. Traffic and Revenue
1. Traffic Volume and Traffic Revenue - Portfolio Summary
On a weighted average basis[9],traffic and revenue increased by 8.2% and 8.2%, respectively, for the Quarter compared to pcp. The highlights of the traffic results include:
Traffic growth of the portfolio during the Quarter was largely attributable to:
-The three newly opened assets[10] delivered stable traffic ramp-up of 8.6%[11] 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 across Machang Bridge increased significantly at 65.5% during the Quarter on pcp due to the new road connection (Yanggok-Wanam route of the national highway and Changwon-Busan Expressway:stage 2), which opened on 13 October 2013
Traffic for each toll road asset is calculated as the 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 compensation payments receivable 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 growth of traffic volume and 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 Third Quarter
2014 Year to Date
% of MKIF Portfolioc
Asset
Traffic (%)a
Revenue (%)b
Traffic (%)a
Revenue (%)b
Incheon International Airport Expressway
10.0%
7.8%
9.8%
4.8%
6.7
Baekyang Tunnel
2.3%
2.4%
1.4%
1.5%
0.1
Gwangju Second Beltway, Section 1
4.6%
5.1%
4.6%
5.1%
12.8
Gwangju Second Beltway, Section 3-1
2.1%
2.2%
1.7%
1.7%
4.7
Woomyunsan Tunnel
6.7%
6.7%
5.9%
5.9%
1.2
Cheonan-Nonsan Expressway
5.0%
5.6%
4.9%
5.4%
16.4
Soojungsan Tunnel
6.6%
6.7%
4.6%
4.7%
5.9
Machang Bridge
65.5%
67.1%
58.8%
60.6%
6.9
Yongin-Seoul Expressway
8.0%
8.1%
7.4%
7.4%
8.2
Seoul-Chuncheon Expressway
3.2%
3.3%
3.0%
3.3%
8.3
Incheon Grand Bridge
13.6%
13.0%
12.9%
12.2%
9.9
Weighted Average
8.2 %
8.2%
7.6%
7.2%
-
a Percentage increase compared to pcp, based on average daily traffic
b Percentage increase compared to pcp, 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
Q3 2013
Q3 2014
% change
2013
2014
% change
Average daily traffic (vehicles / day)
59,233
65,165
10.0%
54,651
60,030
9.8%
Average daily revenue (1,000 won)
365,889
394,370
7.8%
350,030
366,843
4.8%
Note: Traffic for the Quarter increased compared to pcp due to Cheongra IC opening in July 2013. Toll rates (small vehicle: from KRW 8,000 to KRW 7,600) were discounted to reflect the new traffic inflow from Cheongra IC and as a result traffic revenue growth was lower than volume growth
Baekyang Tunnel
Category
PCP
Year on Year
Q3 2013
Q3 2014
% change
2013
2014
% change
Average daily traffic (vehicles / day)
72,705
74,399
2.3%
71,955
72,930
1.4%
Average daily revenue (1,000 won)
52,106
53,362
2.4%
51,558
52,312
1.5%
Gwangju Second Beltway, Section 1
Category
PCP
Year on Year
Q3 2013
Q3 2014
% change
2013
2014
% change
Average daily traffic (vehicles / day)
41,272
43,183
4.6%
39,786
41,626
4.6%
Average daily revenue (1,000 won)
43,141
45,323
5.1%
41,753
43,884
5.1%
Note: Traffic and revenue for the Quarter 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
Gwangju Second Beltway, Section 3-1
Category
PCP
Year on Year
Q3 2013
Q3 2014
% change
2013
2014
% change
Average daily traffic (vehicles / day)
33,744
34,451
2.1%
33,083
33,637
1.7%
Average daily revenue (1,000 won)
35,555
36,341
2.2%
34,917
35,504
1.7%
Woomyunsan Tunnel
Category
PCP
Year on Year
Q3 2013
Q3 2014
% change
2013
2014
% change
Average daily traffic (vehicles / day)
25,626
27,331
6.7%
25,116
26,607
5.9%
Average daily revenue (1,000 won)
55,312
59,034
6.7%
54,244
57,461
5.9%
Note: Traffic and revenue for the Quarter 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
Q3 2013
Q3 2014
% change
2013
2014
% change
Average daily traffic (vehicles / day)
46,982
49,311
5.0%
44,537
46,722
4.9%
Average daily revenue (1,000 won)
388,830
410,483
5.6%
369,863
389,815
5.4%
Note: Traffic and revenue for the Quarter increased compared to pcp due to growing traffic inflow from Nam-Pungse IC opened in July 2014
Soojungsan Tunnel
Category
PCP
Year on Year
Q3 2013
Q3 2014
% change
2013
2014
% change
Average daily traffic (vehicles / day)
43,593
46,482
6.6%
43,108
45,086
4.6%
Average daily revenue (1,000 won)
31,776
33,904
6.7%
31,432
32,909
4.7%
Note: Traffic and revenue for the Quarter increased compared to pcp mainly due toopening of Hi-Pass toll collection system in January2014
Machang Bridge
Category
PCP
Year on Year
Q3 2013
Q3 2014
% change
2013
2014
% change
Average daily traffic (vehicles / day)
16,477
27,262
65.5%
15,807
25,099
58.8%
Average daily revenue (1,000 won)
36,262
60,593
67.1%
34,774
55,854
60.6%
Note: Traffic and revenue for the Quarter increased significantly compared to pcp due to the new road connection, which opened on13 October 2013
Yongin-Seoul Expressway
Category
PCP
Year on Year
Q3 2013
Q3 2014
% change
2013
2014
% change
Average daily traffic (vehicles / day)
71,268
76,983
8.0%
69,186
74,272
7.4%
Average daily revenue (1,000 won)
127,714
138,061
8.1%
123,976
133,165
7.4%
Note: Traffic and revenue for the Quarter increased compared to pcp due to the increase in the traffic from higher residence occupancy in the region. Average daily traffic volume of the Quarter was 83% of the CA forecast
Seoul-Chuncheon Expressway
Category
PCP
Year on Year
Q3 2013
Q3 2014
% change
2013
2014
% change
Average daily traffic (vehicles / day)
46,199
47,662
3.2%
40,057
41,273
3.0%
Average daily revenue (1,000 won)
290,721
300,444
3.3%
253,387
261,623
3.3%
Note: Average daily traffic volume up to the end of the Quarter was 90% of the CA forecast
Incheon Grand Bridge
Category
PCP
Year on Year
Q3 2013
Q3 2014
% change
2013
2014
% change
Average daily traffic (vehicles / day)
33,469
38,008
13.6%
30,765
34,742
12.9%
Average daily revenue (1,000 won)
172,263
194,608
13.0%
159,703
179,222
12.2%
Note: Traffic and revenue for the Quarter increased compared to pcp due to more airport users travelling across the road. Average daily traffic volume up to the end of Quarter was 82% of CA forecast
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
Receivedamount
Due date without additional interest
Incheon International Airport Expressway
101,838
-
February 2015
-
Baekyang Tunnel
6,351
3,678
April 2014
7,8462
Gwangju Second Beltway, Section 1
21,114
-
December 2014
20,2613
Gwangju Second Beltway, Section 3-1
6,434
-
December 2014
6,0224
Woomyunsan Tunnel
5,605
-
February 2014
12,5735
Cheonan-Nonsan Expressway
52,184
-
February 2015
-
Soojungsan Tunnel
11,827
10,884
April 2014
2,8046
Machang Bridge
13,087
-
February 2014
13,0877
Yongin-Seoul Expressway
7
-
February 2015
-
Seoul-Chuncheon Expressway
9,833
-
February 2015
-
Incheon Grand Bridge
13,830
-
February 2015
-
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. 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 filed a claim to the Central Administrative Appeals Commission against the Order
4. Unpaid amount of 2012. GMC plans to pay the remaining amount after the current legal proceedings between GMC and KBICL are finalized. Negotiation is underway to advance the payment
5. 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
6. 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
7. Unpaid amount of 2013. Deferred interest is currently in effect on the remaining amount. Machang Bridge initiated an ICC arbitration process to claim the overdue MRG payment
[1] On a weighted average basis based on revenue size of each asset and the MKIF's equity interest in each concession company
[2] Yongin-Seoul Expressway, Seoul-Chuncheon Expressway and Incheon Grand Bridge
[3] Source: Busan Port Authority (total volume of the five container terminals of the New Port),
BNP (BNP's volume / handling capacity of the five container terminals of the New Port)
[4]Five container terminals, including BNP, are currently in operation at Busan New Port
[5] Proportionately consolidated cash balance (including MKIF cash balance of KRW 34.9bn)
[6] KRW 60 billion 5-year fixed rate bonds scheduled to mature in May 2016
[7] 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
[8] Hedging (Fixed) = Proportionately consolidated MKIF net debt adjusted for fixed debt / Proportionately consolidated MKIF net debt
[9] On a weighted average basis based on revenue size of each asset and the MKIF's equity interest in each concession company
[10] Yongin-Seoul Expressway, Seoul-Chuncheon Expresswayand Incheon Grand Bridge
[11]Weighted average daily traffic of3rd quarter of 2014 over 3rd quarter of 2013
This information is provided by RNS
The company news service from the London Stock Exchange
END
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