Macquarie Korea Infrastructure Fund General Presentation November 2014 STRICTLY CONFIDENTIAL

Macquarie Korea Infrastructure Fund
General Presentation
November 2014
STRICTLY CONFIDENTIAL
Important notice
DISCLAIMER
This presentation is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives, financial situation and
particular needs of the investor. Before making an investment in Macquarie Korea Infrastructure Fund (“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 after reading investment prospectus, if necessary.
MKIF and Macquarie Korea Asset Management Co., Ltd.(“MKAM”) are not authorised deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia) and their
obligations 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 MKIF/ MKAM.
Information, including forecast financial information, in this presentation should not be considered as a recommendation in relation to holding, purchasing or selling shares, securities or other
instruments in MKIF. Due care and attention has been used in the preparation of forecast information. However, actual results may vary from forecasts and any variation may be materially positive
or negative. Forecasts by their very nature, are subject to uncertainty and contingencies many of which are outside the control of MKIF. Past performance and results are not a reliable indication of
future performance.
Based on the performance of the fund, loss of principal may incur and such losses will be vested to investors.
This presentation is not an offer for sale of the securities of 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, or in any jurisdiction where such offer or sale
is not permitted. MKIF does not intend to register any portion of any contemplated offering in the United States or to conduct a public offering of 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.
FORWARD LOOKING STATEMENT
This presentation contains forward-looking statements, in particular, under the heading “Business Overview”. 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.
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 1
Contents
1
2
3
Business Overview
 Leading infrastructure fund in Korea
4
 Minimum Revenue Guarantee
 Corporate structure
5
 Healthy financial position
10
 Landmark assets in Korea
6
 Track record of stable distributions
11
 Portfolio summary
7
 Key investment highlights
12
 Stable and long-term businesses
8
9
Key Results – 3Q 2014
 3Q highlights
14
 Newer toll road assets
17
 Financial results
15
 Busan New Port Phase 2-3 (BNP)
18
 Underlying asset performance
16
 Litigation management
19
 Financial position statements
21
 Management fees
27
 Profit and loss statements
22
 Macquarie Funds Group
28
 Cashflow statements
23
 Macquarie worldwide investments
 Portfolio
24
 Operating performance by asset
25
 Competitive advantage of Macquarie
Infrastructure & Real Assets (MIRA)
 Minimum revenue guarantee summary
26
Appendices
STRICTLY CONFIDENTIAL  MACQUARIE
 MIRA infrastructure overview
29
30
31
PAGE 2
01
Business Overview
STRICTLY CONFIDENTIAL
A leading infrastructure fund in Korea
(As of 30 September 2014)
MKIF is a listed infrastructure fund with a market cap over KRW 2.3trn (USD 2.3bn)
 Established in 2002 / Listed in 2006 on KRX and LSE
 Invests only in Korea as defined under the Korean PPI Act1
 Largest portfolio of toll roads in Asia
 >12 years of stable performance
 Currently trading on approx. 5~6% yield
 Korean credit rating of AA0 (Stable)2
Key Shareholders3
Top shareholders4
International
investors
23.6%
Domestic
institutions
20.8%
55.6%
1. Newton Investment Management
8.3%
2. Shinyoung Asset Management
5.9%
3. Hanwha Life Insurance
6.8%
4. Kyobo Life Insurance
5.9%
* Macquarie Group
3.8%
Domestic
Retail
1.
2.
3.
4.
Private Participation in Infrastructure Act (“PPI Act”) defines infrastructure sectors including roads, railways, ports, energy, airport, communication, water resources, etc.
Rated by Korea Ratings on 4 April 2014
As at 30 June 2014
Source: Financial Supervisory Service (over 5% holders and MKAM’s affiliates as of 31 October 2014)
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PAGE 4
Corporate structure
MKIF is a holding company of 12 infrastructure project companies
 Externally managed by Macquarie Korea Asset Management Co., Ltd (“MKAM”)
Concessionaire
 Active manager of the underlying project companies
 Corporate tax-exempted when more than 90% of distributable earnings distributed
Baekyang Tunnel
Ltd
Cheonan Nonsan
Expressway Co., Ltd
Shareholders
Invest
Distribute



Corporate Debt
• Credit Facility (KRW 250bn)
• Corporate bonds (KRW 250bn)
Invests in:
MKIF
100%
60%
New Airport
Hiway Co., Ltd
24.1%
Kwangju Beltway
Investment Co., Ltd
100%
Kwangju Ring
Road Company Ltd
75%
Soojungsan
Investment Co., Ltd
100%
Woomyusan
Infraway Co,. Ltd
36%
MCB Co. Ltd
70%
Seoul Chuncheon
Expressway Co., Ltd
15%
Incheon Bridge
Co. Ltd
41%
Gyeogsu Highway
Co., Ltd
35%
BNCT Co., Ltd
30%
Receives:


Management
Agreement
MKAM
(Manager)
STRICTLY CONFIDENTIAL  MACQUARIE
Equity
Subordinated debt
Senior debt
MKIF
shareholding
Interest income
Dividend
PAGE 5
Landmark assets in Korea
(As of 30 September 2014)
MKIF’s investments are well recognised landmark assets located in/around major cities
Seoul-Chuncheon Expressway (SCE)
Seoul Chuncheon Expressway Co., Ltd
Incheon International Airport Expressway (NAHC)
New Airport Hiway Co., Ltd
Incheon Grand Bridge (IGB)
Incheon Bridge Co. Ltd
Incheon Metropolitan City
Third largest city in Korea
Population ~2.9 million
Woomyusan Tunnel (WIC)
Woomyusan Infraway Co,. Ltd
Yongin-Seoul Expressway (YSE)
Gyeogsu Highway Co,. Ltd
Seoul Metropolitan City
Largest city in Korea
Population ~10.1 million
Cheonan-Nonsan Expressway (CNEC)
Cheonan Nonsan Expressway Co,. Ltd
Gwangju 2nd Beltway Section 1 (KBICL)
Kwangju Beltway Investment Co., Ltd
Gwangju 2nd Beltway Section 3-1 (KRRC)
Kwangju Ring Road Co., Ltd
Gwangju Metropolitan City
Sixth largest city in Korea
Population ~1.5 million
Baekyang Tunnel (BYTL)
Baekyang Tunnel Ltd
Machang Bridge (MCB)
MCB Co., Ltd
Busan Metropolitan City
Second largest city in Korea
Population ~3.5 million
Busan New Port Phase 2-3 (BNP)
BNCT Co., Ltd
Soojungsan Tunnel (SICL)
Soojungsan Investment Co., Ltd
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PAGE 6
Portfolio summary1
As of 30 September 2014
Well balanced and diversified portfolio of essential infrastructure assets
 Predominantly toll roads
 Relatively young portfolio with average age of 8 years
 Ratio of central and local government involvement is 68:32 in terms of investments
Portfolio composition by asset
Portfolio composition by phase and type
BYTL
0.1 %
KBICL
12.8%
BNP
18.8%
Senior debt
13.7%
NAHC
6.7%
Port
18.8%
 STAGE OF OPERATION
Mature
12.9%
Equity
33.3%
SICL
6.0%
IGB
9.9%
Ramp up
45.2%
Toll-road
81.2%
SCE
8.3%
YSE
8.2%
MCB
6.8%
CNEC
16.4%
4.8%
KRRC
Growth
41.9%
– Ramp-up (initial stage of operation
featured by rapid build-up in revenue as
the users lean about the asset and make
an assessment of the facility)
– Growth (stable increment of traffic and
fulfils investment expectations)
– Mature (stable traffic volume until
concession termination and hand back)
Sub debt
WIC
1.2%
53.0%
1. Based on commitment amount
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PAGE 7
Stable and long-term businesses
Underlying investments operate on long-term, predictable cash flow with downside
protection
(As of 30 September 2014)
 Long-term concessions with weighted average1 remaining life of 21 years
 All concessions protected under the Early Termination Support provision
 11 toll roads are subject to minimum revenue guarantee (MRG) by the Korean government for next 9 years on average
Present
Weighted Average
Revenue Support
9 years
Weighted Average
Concession Term
21 years
Early Termination
Support2,3












BYTL(L)
Relevant Authority
(C) Central government
(L) Local government
KBICL(L)
NAHC(C)
SICL(L)
CNEC(C)
Revenue Support2
Concession Term2
WIC(L)
KRRC(L)
MCB(L)
YSE(C)
SCE(C)
IGB(C)
BNP(C)
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
1. On a weighted average basis based on total commitment amount
2. Revenue support and termination payment provisions vary for each concession
3. Concession companies have the right to receive payments if the relevant concession agreement is terminated prior to expiration of the concession term, including termination due to events
attributable to the concession company or the government body or for events of force majeure
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PAGE 8
Minimum Revenue Guarantee
Minimum Revenue Guarantee (MRG) mechanism
Conceptual Diagram
Actual Revenue
Revenue
Revenue Cap1
Relevant government
authorities extract the
excess portion
Forecast Revenues2
MRG1
 MRG and Revenue support for 11 of
MKIF’s 12 assets3
 Inflation-linked revenue support
 MRG line tracking the forecast revenue line
(typically 80~90% below forecast revenue)
 Korea’s sovereign rating as of September 2014:
– S&P:
A+
(Positive)
– Moody’s: Aa3 (Stable)
Government bodies compensate
the shortfall
1. MRG and revenue caps vary across assets
2. Forecast revenues set out in the Concession Agreement
3. In two of 11 MRG assets, no revenue guarantee applies if actual revenue falls below 50% of the toll revenue forecast
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 9
Healthy financial position
(As of 30 September 2014)
Stable revenues with external debt amortisation result in increasing cash income for MKIF
 MKIF-level debt capped at 30% of its paid in capital (KRW 500bn) with average maturity of 3.8 years
 Current total MKIF-level debt of KRW 456bn
– KRW 206bn drawn down from KRW 250 billion of credit facility limit
– KRW 90bn of 5-yr fixed rate bond (maturing in May 2017) & KRW 140bn of 7-yr fixed rate bond (maturing in May 2019)
 Project company-level debt declining on senior debt amortisation with remaining average maturity of 7.5 years
 MKIF cash income expected increase as underlying debt declines
CASH1
KRW
220.2bn
Asset-level outstanding debt balance5
(KRW bn)
1,200
AMORTISING MATURITY2
GEARING3
7.5 years
38%
900
600
300
INTEREST RATE HEDGE4
1.
2.
3.
4.
5.
62% until end of Sep 2015
2015
2020
2025
2030
2035
2040
2045
Proportionately consolidated cash balance (including MKIF cash balance of KRW 34.9bn)
Weighted average amortising maturity of the underlying asset level external debt
Gearing = Proportionately consolidated MKIF Net Debt / (Proportionately consolidated MKIF Net Debt + MKIF market capital (3-month average))
Hedging (Fixed) = Proportionately consolidated MKIF net debt adjusted for fixed debt / Proportionately consolidated MKIF net debt
Outstanding debt balance based on amortisation schedule of asset level external debt on a proportionate equity shareholding basis. Excludes MKIF level corporate loan balance
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 10
Track record of stable distributions
Targets long-term, sustainable and growing distributions
 Distribution is paid semi-annually (record dates in June and December)
 Distribution floor is higher of taxable income or 100% of distributable accounting income (to maintain tax exempt status)
MKIF distribution history since listing (per share)
(KRW / share)
One-off 1
Normal distribution
Stock distribution
700
600
2014 1H
DISTRIBUTION
582
513
122
500
420
480
440
186
251
77
193
254
100
Circa 5.3%3
330
13
403
313
0
153
CASH YIELD
344
53
300
200
117
390
400
KRW 193 per
share2
291
317
363
360
209
10
183
17
2006
2007
2008
2009
2010
2011
2012
2013
2014 1H
1. One-off dividend includes one-off gains and higher taxable income than accounting income per share
2. Total of KRW193 per share will be accounted as distribution income in calculating dividend income tax and tax payable under Korean law. Investors are advised to consult their own tax advisor
for the appropriate tax treatment of the distribution
3. Based on closing price of 30 September 2014 and 2014 first half distribution (annualised, excluding one-off dividend)
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 11
Key investment highlights
MKIF is structured to deliver underlying growth
 Stable and predictable underlying revenues which are inflation-linked and substantially MRG-backed
 Embedded growth on increasing income
 Additional growth potential through asset re-ratings and new investments
 Healthy financing position with no external refinancing needs until 2018
 Macquarie-managed fund
 Management fees aligned with shareholders’ interest
Project Company’s Cash Flow1
Cash Flow to MKIF1
(Conceptual Diagrams)
(Conceptual Diagrams)
Revenue
Dividend to
shareholders
Senior debt service
(external debt)
Net cash receipts
(Profit & investment principal)
Sub-debt service
(Shareholder loan)
OPEX & CAPEX
Time in Years
Time in Years
1. Conceptual diagram. Assuming no portfolio change such as divestment of assets or new investment
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 12
02
Key Results – 3Q 2014
STRICTLY CONFIDENTIAL
3Q highlights
• Solid financial and operational performance
– MKIF revenue and net income recorded KRW 45.0bn and KRW 30.4bn, up by 2.2% and 0.1%, respectively, compared to
the previous corresponding period (“pcp”)
– Underlying traffic volume1 and revenue1 grew by 8.2% and 8.2%, respectively, on pcp
– Weighted average daily traffic for the three newer toll road assets2 reached 84.8%3 of the Concession Agreement (“CA”)
forecasts compared with 81.5% in the pcp
– Total container throughput volume of Busan New Port Phase 2-3 (“BNP”) reached 0.36mn TEUs in 3Q,
22.4% increase compared to pcp and 4.7% growth compared to the previous quarter
• Healthy financial position maintained (as at 30 September 2014)
– Proportional cash balance of KRW 220.2bn including MKIF cash of KRW 34.9bn
– Continued de-gearing of asset level debt with average maturity of 7.5 years
– MKIF net debt of KRW 421.5 billion with no significant external financing needs until May 20184
– Proportionately consolidated gearing of 38%5 with 62%6 of interest obligations at fixed rates
• Litigation management
– Four local concession assets currently under legal dispute against respective government authorities
– Baekyang Tunnel (BYTL) / Soojungsan Tunnel (SICL): Busan District Court ruled in favour of BYTL and SICL (10 Oct 2014)
– Machang Bridge: International Chamber of Commerce arbitration process initiated to claim overdue support payments
(18 Sept 2014)
1.
2.
3.
4.
5.
6.
On a weighted average basis based on revenue size of each asset and the MKIF’s equity interest in each concession company.
Yongin-Seoul Expressway, Seoul-Chuncheon Expressway and Incheon Grand Bridge
On a weighted average basis based on total commitment amount and average daily traffic
KRW 60 billion 5-year fixed rate bonds scheduled to mature in May 2016
Gearing = Proportionately consolidated MKIF Net Debt / (Proportionately consolidated MKIF Net Debt + MKIF market capital (3-month average))
Hedging (Fixed) = Proportionately consolidated MKIF net debt adjusted for fixed debt / Proportionately consolidated MKIF net debt
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 14
Financial results
(Unit: KRW mn)
Quarter Ended
Year-to-Date
Year Ended
Year Ended
30 Sep 2014
30 Sep 2014
31 Dec 2013
31 Dec 2012
45,011
135,722
212,907
205,749
45,001
132,326
173,642
171,912
Dividend income
-
3,386 2
11,246 3
-
Gain on sale of investment
-
-
28,019 4
33,151 5
10 1
10 1
-
686
14,614
41,393
54,217
51,626
Management fee
7,996
22,526
30,810
27,786
Interest expense
5,058
14,348
19,746
19,828
Other fees and expenses
1,560
4,519
3,661
4,012
30,397
94,329
158,690
154,123
91.7
284.6
478.8
465.0
Revenue
Interest income
Other income
Expenses
Net income
EPS (KRW per share) 6
1.
2.
3.
4.
5.
6.
Commitment fee income from Cash Deficiency Support Facility (“CDS”) for BNP
One-off liquidation dividend income from CNEC ABS SPC (tranche 3)
One-off liquidation dividend income from CNEC ABS SPC (tranche 1 and tranche 2)
One-off gain from the divestment of Seoul Subway Line 9 Section1
One-off gain from the sale of equity in Daegu 4th Expressway East
Based on 331.5 million shares outstanding
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 15
Underlying asset performance
TRAFFIC VOLUME GROWTH1
TRAFFIC REVENUE GROWTH1
PORTFOLIO AGE2
8.2%
8.2%
8.3 years
3Q 2014
Average daily traffic volume
Vehicles/day
2014 (YTD)
Average daily traffic revenue
% change
KRW
on YTD thousand/day
% change
on YTD
Average daily traffic volume
Vehicles/day
Average daily traffic revenue
% change
KRW
on pcp thousand/day
% change
on pcp
Incheon International Airport
Expressway
65,165
10.0%
394,370
7.8%
60,030
9.8%
366,843
4.8%
Baekyang Tunnel
74,399
2.3%
53,362
2.4%
72,930
1.4%
52,312
1.5%
Gwangju Second Beltway, Section 1
43,183
4.6%
45,323
5.1%
41,626
4.6%
43,884
5.1%
Gwangju Second Beltway, Section 3-1
34,451
2.1%
36,341
2.2%
33,637
1.7%
35,504
1.7%
Woomyunsan Tunnel
27,331
6.7%
59,034
6.7%
26,607
5.9%
57,461
5.9%
Cheonan-Nonsan Expressway
49,311
5.0%
410,483
5.6%
46,722
4.9%
389,815
5.4%
Soojungsan Tunnel
46,482
6.6%
33,904
6.7%
45,086
4.6%
32,909
4.7%
Machang Bridge
27,262
65.5%
60,593
67.1%
25,099
58.8%
55,854
60.6%
Yongin-Seoul Expressway
76,983
8.0%
138,061
8.1%
74,272
7.4%
133,165
7.4%
Seoul-Chuncheon Expressway
47,662
3.2%
300,444
3.3%
41,273
3.0%
261,623
3.3%
Incheon Grand Bridge
38,008
13.6%
194,608
13.0%
34,742
12.9%
179,222
12.2%
Weighted average growth rate1
8.2%
8.2%
7.6%
7.2%
1. On a weighted average basis based on revenue size of each asset and the MKIF’s equity interest in each concession company
2. Operation period of each concession company on a weighted average basis based on respective commitment amount
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 16
Newer toll road assets1
% OF PORTFOLIO
% OF CA FORECAST TRAFFIC VOLUME2
TRAFFIC VOLUME GROWTH3
26%
84.8%
8.6%
Quarterly trend of traffic volume
3Q 2014 Traffic Performance
(Vehicles/day)
80,000
Asset
Operation
commencement
Traffic
volume3
growth
on pcp
Traffic
revenue3
growth
on pcp
% of CA
forecast
traffic
volume
70,000
60,000
Yongin-Seoul
Expressway (YSE)
01-Jul-2009
8.0%
8.1%
83%
50,000
40,000
Seoul-Chuncheon
Expressway (SCE)
15-Jul-2009
Incheon Grand
Bridge (IGB)
19-Oct-2009
3.2%
3.3%
90%
30,000
13.6%
13.0%
82%
20,000
10,000
2011 Q2
Q1
Q3
YSE
Q4 2012 Q2
Q1
Q3
Q4 2013 Q2
Q1
SCE
Q3
Q4 2014 Q2
Q1
IGB
Q3
1. Toll road assets opened since 2009
2. During 3Q 2014, on a weighted average basis based on total commitment amount and average daily traffic
3. Weighted average daily traffic during 3Q 2014 over 3Q 2013
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PAGE 17
Busan New Port Phase 2-3 (BNP)
BNP is one of the five container terminals in operation at Busan New Port (“New Port”)
BNP overview
MKIF Commitment1
KRW
309.4bn
18.8 %
% of MKIF Portfolio1
1.45mn TEU
FY2014 Volume Estimate
FY2014 Revenue Estimate
KRW
70bn
Performance highlights
FY2014 (Jan – Sep)
BNP
New Port
North Port
Container Terminals
(“CTs”) in Operation
(New Port Terminal)
5 Terminals
4 Terminals
Handling Capacity of
CTs (TEU p.a.)
1.8mn2
12.9mn2
7.7mn3
First nine months
volume in FY2014
1.04mn4
8.88mn5
4.28mn5
Volume Growth
over pcp
21.3%4
10.0%5
0.3%5
Capacity Utilisation
Rate of CTs (%)
77.2%
91.6%
74.1%
Busan Port
Market Share5
7.0%
65.0%
35.0%
1.
2.
3.
4.
5.
New Port
North Port
Seoul
Busan
Based on commitment
Source: BNP – BNP: based on existing facilities / 3rd party facilities (excl. BNP): 2,000 TEU per berth meter / ‘Alliance’ facilities: 2,100 TEU per berth meter
Source: BNP – estimation
Source: BNP – internally compiled total throughput which includes shifting
Source: Busan Port Authority – total container volume of each port’s CTs for volume and capacity utilisation / total container volume of each port for market share within Busan Port
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 18
Litigation management
MKIF’s four local concession assets under legal dispute with the respective government authorities
Assets
% of MKIF
portfolio1
Baekyang Tunnel
(BYTL)
0.1%
Soojungsan Tunnel
(SICL)
5.9%
Machang Bridge
(MCB)
6.9%
Gwangju 2nd Beltway,
Section 1 (KBICL)
12.8%
Case
Status
Administrative order to
reinstate the original capital
structure from the time of the
concession agreement signing
SICL & BYTL received favorable ruling
from the Busan District Court (10 Oct 2014)
KRW 13.1bn of overdue
government support payment
MCB initiated International Chamber of
Commerce arbitration process
Administrative order to
reinstate the original capital
structure from the time of the
concession agreement signing
Undergoing the Seoul Supreme Court
process
Administrative order to
suspend MRG payment
Undergoing the Central Administration
Appeals Commission process and
anticipate ruling in November 2014
Busan City appealed to the Busan
Appellate Court (24 Oct 14)
Government
Authority
Busan City
Geongsangnam-do
Gwangju City
1. On commitment basis
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 19
A
APPENDIX
Appendix
STRICTLY CONFIDENTIAL
Financial position statements
Non-consolidated – as at 30 September 2014 and 31 December 2013
(Unit: KRW mn)
30 September 2014 31 December 2013
Assets
Invested Assets
1,679,551
1,637,919
34,942
14,751
1,091,506
1,090,065
553,103
CAPITAL INJECTION INTO MKIF
INVESTMENTS
Asset
Item
Gwangju 2nd Beltway, 3-1
Senior Debt
(1,727)
533,103
Soojungsan Tunnel
Senior Debt
(5,396)
430,919
404,246
Busan New Port 2-3
Sub Debt
422,837
394,913
Gwangju Second Beltway,
Section 1
Equity
Other receivables
2,358
2,947
Deferred costs, net
5,724
6,386
2,110,470
2,042,165
1
251
7,996
7,400
Long-term debt
206,430
68,581
Bonds
249,466
249,333
1,555
1,503
465,448
327,068
1,670,986
1,670,986
(25,964)
44,111
Total Shareholders’ Equity
1,645,022
1,715,097
Total Liabilities and Shareholders’ Equity
2,110,470
2,042,165
Cash & deposits
Loans
Equity securities
Others
Interest receivable
Total Assets
Total
3Q 2014
8,600
20,000
21,477
* Excludes Baekyang Tunnel loan amortisation of KRW 36mn
Liabilities
Accounts Payable
Management fee payable
Other liabilities
Total Liabilities
Shareholders’ Equity
Share Capital
Retained Earnings(Losses)
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 21
Profit and loss statements
Non-consolidated – 3 months to 30 September 2014 (Compared to 3Q 2013)
(Unit: KRW mn)
3Q 2014
Revenue
3Q 2013
45,011
44,038
45,001
44,038
10 1
-
14,614
13,659
7,996
7,902
Custodian fees
83
84
Administrator fees
52
52
Interest expenses
5,058
5,194
Other expenses
1,425
427
Interest Income
Other Income
Expenses
Management fees
Net Profits
EPS (KRW)2
30,397
30,379
91.7
91.7
1. Commitment fee income from Cash Deficiency Support Facility (“CDS”) for BNP
2. Based on 331.5 million shares outstanding
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 22
Cashflow statements
Non-consolidated – 12 Months to 31 December 2013 and 31 December 2012
(Unit: KRW mn)
2013
2012
Cashflows from operating activities:
Cash inflows from operating activities
254,526
200,405
131,404
91,159
8,470
45,827
114,652
63,419
(68,737)
(33,868)
Investments
(36,000)
(4,720)
Fees and expenses
(32,737)
(29,148)
185,789
166,537
(155,000)
(180,000)
132,500
74,500
Distributions paid
(155,786)
(127,612)
Interest expense
(13,467)
(13,403)
(100)
(100)
(191,853)
(246,615)
Net increase (decrease) in cash and deposits
(6,064)
(80,078)
Cash and deposits at beginning of the period
20,815
100,893
Cash and deposits at end of the period
14,751
20,815
Sale of investment
Collection of other loans receivable
Interest and other income
Cash outflows from operating activities:
Net cash provided by (used in) operating activities
Cashflows from financing activities:
Repayment of long-term debt
Drawdown from long-term debt
Borrowing related costs
Net cash provided by (used in) financing activities
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 23
Portfolio1
(As of 30 September 2014)
MKIF COMMITMENT AND DEBT INTEREST RATE
(Units: KRW bn, %)
Name
Abbrev.
Equity
Ownership (%)
Subordinated
Debt
Interest
Rate (%)
Baekyang Tunnel
BYTL
1.2
100.0
-
Gwangju Second Beltway, Section 1
KBICL
33.1
100.0
35.22
Incheon International Airport Expressway
NAHC
58.2
24.1
SICL
47.1
CNEC
Senior
Debt
Interest
Rate (%)
Total
1.4
15.0
2.6
20.0
142.0
10.0
210.3
51.7
13.9
-
100.0
19.3
20.0
30.6
87.8
60.0
182.2
20.0
-
270.0
WIC
10.7
36.0
9.6
20.0
-
20.3
KRRC
28.9
75.0
-
Machang Bridge
MCB
33.8
70.0
79.0
11.4
-
112.8
Yongin-Seoul Expressway
YSE
57.8
35.0
77.0
15.0
-
134.8
Seoul-Chuncheon Expressway
SCE
48.6
15.0
87.4
11.6
-
136.0
Incheon Grand Bridge
IGB
74.5
41.0
89.4
9.3
-
163.9
Busan New Port Phase 2-3
BNP
66.4
30.0
243.03
12.0
-
309.4
Soojungsan Tunnel
Cheonan-Nonsan Expressway
Woomyunsan Tunnel
Gwangju Second Beltway, Section 3-1
Total
Percentage(%)
49.1
109.9
8.5
7.85
97.0
78.0
548.1
873.8
223.1
1,645.0
33.3%
53.1%
13.6%
100%
1. Based on commitment amount
2. Includes KRW 3.2bn working capital facility (Interest rate of 15% p.a.)
3. Includes KRW 50bn working capital facility (Interest rate of 14% p.a.)
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 24
Operating performance by asset1
12 Months to 31 December 2013
(Unit: KRW mn)
2013
Assets
Operating
Revenue2
OPEX
EBITDA
Net Debt3
2012
EBITDA Net Debt Operating
margin to EBITDA Revenue2
OPEX
EBITDA
Net Debt3
EBITDA Net Debt
margin to EBITDA
Gwangju Second Beltway, Section 14
33,544
(5,540)
28,004
(1,459)
83.5%
(0.1x)
14,552
(4,862)
9,690
(1,606)
67%
(0.2x)
Gwangju Second Beltway, Section 3-15
12,882
(4,057)
8,825
(1,988)
68.5%
(0.2x)
18,331
(3,965)
14,367
(1,775)
78%
(0.1x)
Soojungsan Tunnel
11,582
(4,013)
7,569
(4,574)
65.4%
(0.6x)
11,417
(3,909)
7,509
(13,362)
66%
(1.8x)
Baekyang Tunnel5
18,945
(5,055)
13,891
131,008
73.3%
9.4x
21,396
(4,229)
17,166
136,005
80%
7.9x
Incheon International Airport
Expressway
227,174
(25,225)
201,949
117,188
88.9%
0.6x
199,138
(21,008)
178,130
152,424
89%
0.9x
Cheonan-Nonsan Expressway
189,968
(27,403)
162,565
6,937
85.6%
0.0x
186,395
(25,721)
160,675
96,612
86%
0.6x
Woomyunsan Tunnel
20,235
(3,682)
16,553
76,316
81.8%
4.6x
19,869
(3,966)
15,903
76,640
80%
4.8x
Machang Bridge
26,983
(4,942)
22,041
231,328
81.7%
10.5x
23,144
(5,047)
18,098
226,747
78%
12.5x
Yongin-Seoul Expressway
47,040
(10,233)
36,807
361,796
78.3%
9.8x
41,502
(10,393)
31,109
357,281
75%
11.5x
Seoul-Chuncheon Expressway
111,332
(20,533)
90,799
779,414
81.6%
8.6x
106,717
(20,607)
86,110
810,605
81%
11.8x
Incheon Grand Bridge
77,311
(15,997)
61,315
562,525
79.3%
9.2x
68,711
(15,802)
52,909
576,818
77%
10.9x
Busan New Port Phase 2-36
54,767
(47,902)
6,864
526,103
12.5%
76.6x
23,429
(41,024)
(17,596)
475,628
(75%)
NA
Proportionate average7
29,160
(6,046)
23,115
81,442
79.3%
3.5x
25,836
(5,579)
20,257
85,555
78.4%
4.2x
1.
2.
3.
4.
5.
6.
7.
Management estimated, unaudited figures. Actual results may vary
Revenue compensation and other compensations from the relevant government authority are reflected on cash basis
Excludes Shareholders loans
All or part of MRG portion of operating revenue receivable for 2011 were paid in 2013, resulting in significant increase in operating revenue compared to prior year
MRG portion of operating revenue receivable for 2012 were not paid in 2013, resulting in significant decrease in operating revenue compared to prior year
Busan New Port Phase 2-3 commenced operation 2 January 2012 .
On a proportionate average basis based on MKIF’s equity interest in each concession company
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 25
Minimum revenue guarantee summary
(As of 30 September 2014)
Concession
Term
Concession
Term
Remaining
Revenue
Guarantee
Duration
Revenue
Guarantee
Duration
Remaining
Revenue
Guarantee
Threshold1
Revenue Cap
Threshold1,2
25
10
25
10
90%
110%
28
14
28
14
85%
115%
MOLIT3
30
16
20
6
80%
110%
Busan
Metropolitan City
25
13
25
13
90%
110%
MOLIT
30
18
20
8
82%
110%
Partial revenue sharing in excess of 82%
to 110% level
Woomyunsan Tunnel
Seoul
Metropolitan City
30
19
30
19
79%5
110%
All revenue sharing excess of 79% to 85%
and excess 110%/ Partial revenue
sharing excess of 90% to 110%
Gwangju 2nd Beltway, Section 3-1
Gwangju
Metropolitan City
30
20
30
20
90%
110%
Machang Bridge
GSND6
30
24
30
24
75.78%
120%
Yongin-Seoul Expressway7
MOLIT3
30
25
10
5
70%
130%
Seoul-Chuncheon Expressway7
MOLIT3
30
25
15
10
Incheon Grand Bridge
MOLIT3
30
25
15
10
MOF8
29
26
N/A
N/A
29
21
17
9
Asset
Baekyang Tunnel
Gwangju 2nd Beltway, Section 1
Relevant
Authority
Busan
Metropolitan City
Gwangju
Metropolitan City
Incheon International Airport
Expressway
Soojungsan Tunnel4
Cheonan-Nonsan Expressway
Busan New Port Phase 2-3
Weighted average9
1.
2.
3.
4.
5.
6.
7.
8.
9.
Remarks
Partial revenue sharing in excess of 80%
to 110% level
80%/70%/60% 120%/130%/140% Each threshold for five years
80%
120%
% of annual concession agreement projected revenue
Relevant government authorities are entitled to receive the portion exceeding the threshold
MOLIT (Ministry of Land, Infrastructure and Transport)
In toll revenue below 90%, Busan City Government is obliged to compensate 91.5% of the shortfall amount
79% up to 2023 and 78% from 2024 to 2034
GSND (Gyeongsang Namdo (Provincial) government)
No revenue guarantee applies if actual revenue are below 50 % of the toll revenue forecast
MOF (Ministry of Oceans and Fisheries)
Weighted by investment commitment
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 26
Management fees
•
Manager’s interests aligned with shareholders
•
No performance – no performance fees
•
Underperformance carried forward
Management fee calculated quarterly basis as:

Base Fee
− 1.25% pa falling to 1.10%1 of Net Investment Value (NIV) of MKIF; plus (+)
− 1.15% pa falling to 1.05%1 per annum of Commitment2 of MKIF

Performance Fee
− 20% sharing in cumulative total returns3 over 8% pa
Net Investment Value for any quarter equals:

The average market capitalisation of MKIF over all trading days in each calculation period; plus (+)

The amount of any external borrowings by MKIF; less (-)

Cash or cash equivalent held by MKIF
1. For NIV +Commitment in excess of KRW 1.5 trillion
2. Commitments means all amounts that MKIF has firmly committed for future investment contributions
3. Total return to shareholders reflects both distributions from MKIF to its shareholders and share price performance over each calculation period
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 27
Macquarie Funds Group
Macquarie Infrastructure
and Real Assets (“MIRA”)
Alternative asset management including:
Infrastructure
Real Estate
Agriculture
Energy
Macquarie
Investment
Management (“MIM”)
Macquarie
Specialised Investment
Solutions (“MSIS”)
Securities investment management across:
Fund and equity-based solutions including:
Fixed interest and currencies
Equities, including infrastructure securities
Private markets
Hedge funds
Multi-asset allocation solutions
‘Best of breed’ external managers
Fund linked products
Capital protected investments
Retirement and annuity solutions
Agriculture
Infrastructure debt
Operations
Legal and Compliance
Distribution
A$425bn
AUM1
20
Countries
worldwide1
~1,500
Staff1
1. All numbers as at 31 March 2014
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 28
Macquarie worldwide investments
125 portfolio businesses, ~300 properties and ~3.6 million hectares of farmland1
Spain
UK














Bristol Airport
Airwave
Arqiva
CLP Envirogas
(MEIF Renewables)
Energy Power Resources
(MEIF Renewables)
Thames Water
M6 Toll
Condor Group (ferry services)
Moto (motorway services)
National Car Parks
Wightlink (ferry services)
Baglan Bay Power Station
Sutton Bridge Power Station
Severn Power Station
 Asset Energia Solar
(MEIF Renewables)
 Solpex Energia Solar
(MEIF Renewables)
 Itevelesa
(vehicle inspections)
Poland
 DCT Gdansk
(container terminal)
 TanQuid (tank
storage business)
Canada
Czech Republic
Sweden
Japan
USA
 Autoroute 25
 Fraser Surrey Docks
 Halterm Limited (port)
 Ceske Radiokomunikace
 Czech Gas Networks
 EPR Sweden (MEIF Renewables, Mexico
 Decarred (highways)
wind farm)
 Mareña Renovables (wind farms)
 Varmevarden
 Mexico Tower Partners
 Arlanda Express
 Concesionaria Universidad
Russia
Politécnica
 Brunswick Rail
 Macquarie Mexico REIT
 GSR Energy Investments
 Santiago HydroGen
 Russian Towers
 OGK-5










AMC REIT
Chicago Skyway
Dulles Greenway
Indiana Toll Road
Elizabeth River Tunnels
Goethals Bridge
Harley Marine Services
Icon Parking
Penn Terminals
Airport Services (fixed
base operations)
 Total Terminals International
(Hanjin Pacific Corporation)











 Hanjin Pacific Corporation (Tokyo,
Aquarion Company
Puget Energy
District Energy
Duquesne Light
Hawaii Gas
Broadrock Renewables
MIC Contracted Power and Energy
International-Matex Tank Terminals
Leaf River Gas Storage
Waste Industries
WCA Waste
Osaka)
South Korea
























Belgium
 Brussels Airport
Denmark
 Copenhagen Airports
France
 Pisto SAS (oil storage and
distribution)
 EPR France (MEIF
Philippines
 NLREC Wind Farm
 Philippine Coastal Storage & Pipeline
Renewables, wind farm)
 RES (MEIF Renewables,
wind farm)
 Trois Sources & Lomont
Windfarms
 Compteurs Farnier
(Techem, water metering)
 Autoroutes Paris-RhinRhône
Australia






Germany
 TanQuid (tank storage





business)
GWE (Techem)
Techem (submetering)
Thyssengas
Open Grid Europe
Warnow Tunnel
South Africa
Nigeria
 Lekki Concession Company
 IHS Holdings






Umoya Energy
Cookhouse
Kathu
Bakwena Platinum Corridor
N3 Toll Concessions
Trans African Concessions
 ICAD Effluent Treatment Plant
 Al Ain Industrial City
 Industrial City of Abu Dhabi
1.
Energy
(3 farms)
 Viom Networks
 Adhunik Power and
 GMR Airports (Delhi and
Hyderabad airports)
 Soham Renewable Energy
Natural Resources
 MB Power (Madhya  Trichy Tollways
 GMR Jadcherla
Pradesh)
Expressways
 Ashoka Concessions
 Kinangop Wind Park
Communications
 Cruzeiro do Sul Grãos
India
Waste
Renewable
Energy
Utilities
Roads & Rail






 Oceania Healthcare
Shenyang Zhenxing Environmental
Shenyang Water Treatment Co.
Dallan Hengji Xinrun Water
Hengyang Holdings
Hua Nan Expressway
Star King (China) Food Group
Taiwan
Hobart International Airport
3P Learning
MREEFs
Paraway Pastoral (17 farms)
Lawson Grains (8 farms)
Melro Dairy (1 farm)
New Zealand
China
Brazil
United Arab Emirates
Kenya
Airports
C&M (Cable TV)
North East Chemical
Tongyang Cement’s Waste Heat Power
Youngduk Wind Power
Yeongyang Wind Power
Kangnam City Gas
Daegil Industry / Daegil Environment
Baekyang Tunnel
Cheonan-Nonsan Expressway
Gwangju 2nd Beltway Section 1
Gwangju 2nd Beltway Section 3-1
Incheon Grand Bridge
Incheon International Airport Expressway
Machang Bridge
Seoul Chuncheon Expressway
Soojungsan Tunnel
Woomyunsan Tunnel
Yongin-Seoul Expressway
Busan New Port Phase 2-3
Hanjin Pacific Corporation (ports)
CNE Motorway Service Stations
Hanam-Misa Combined Heat and Power Plant
Goyang Bus Terminal
Hangdarm Island
Protection






Zhejiang Wanna Environment Protection
Longtan Tianyu Terminal
Tianjin Port Huisheng Terminal
Plaza 353
Qingdao
MWREF (Retail Malls)
 Taiwan Broadband Communications
 Hanjin Pacific Corporation (Kaohsiung)
Other Transport
Services
Real Estate
Agriculture
Other Real
Assets
As at 30 June 2014. Represents portfolio businesses which Macquarie Infrastructure and Real Assets manages on behalf of investors with various direct percentage stakes held in each. Portfolio businesses
shown on the map are representative and not exhaustive. In some instances they represent the operations of a single business where it has operations across different countries
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 29
Competitive advantage of
Macquarie Infrastructure & Real Assets (MIRA)
A global leader in managing infrastructure and real assets for over 19 years
EXTENSIVE
EXPERIENCE
PROPRIETARY
INVESTMENT FLOW
STRONG
ALIGNMENT
EFFECTIVE ASSET
MANAGEMENT
— MIRA has over 19 years global infrastructure investment experience
— A$112 billion1 of assets under management across 27 countries
— Access to the proprietary investment sourcing capability of the Macquarie Group
— Long term carry sharing arrangements for fund staff for recently established funds
— Macquarie and staff investment of ~A$2.3 billion2 in MIRA-managed funds
— Local expertise, knowledge and relationships across 28 locations globally
1. Based on proportionate enterprise value, calculated as proportionate net debt and equity value at 30 June 2014 for the majority of assets
2. As at 30 June 2014. Staff investment is ~A$0.2 billion
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 30
MIRA infrastructure overview
1996
Funds / Vehicles
Unlisted
No.
-

27
Listed
No.
2

5
No.
4

110
A$bn
1.6

1051
Unlisted
A$bn
-

382
Listed
A$bn
0.6

92
Portfolio Businesses
Assets under Management
Equity under Management
June 2014
1. Based on proportionate enterprise value, calculated as proportionate net debt and equity value at 30 June 2014 for the majority of assets
2. Listed funds – market capitalisation plus fully underwritten or committed future capital raisings. Unlisted funds – committed capital less any called capital returned to investors. Invested capital for
other MIRA businesses. For jointly managed funds, amount is representative of Macquarie’s economic ownership of the JV manager. Adjustments have been made where MIRA managed funds
have invested in other MIRA managed funds
STRICTLY CONFIDENTIAL  MACQUARIE
PAGE 31
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