Cintra: strong growth in traffic and sustained margins
Cintra increased EBITDA by 22% to 259.2 million euro in the first half of 2006
Madrid – Spain – A strengthened position in the US (Indiana Toll Road operation commenced, and development of a third toll road) and entrance into the Greek concession market were the highlights of a period of strong growth in traffic and sustained margins.
EBIT rose by 23.4% to 163.8 million euro
Revenues increased by 21% to 389.3 million euro
Growing international footprint: 76.2% of EBITDA and 67.4% of revenues were generated outside Spain
Cintra’s internal indicative value of its main assets is 6.391 billion euro.
Cintra, which specialises in bidding for and managing toll roads and car parks, increased EBITDA by 22% in 1H06 to 259.2 million euro, raising the EBITDA margin to 66.6%. In the first half of 2006, 76.2% of EBITDA came from outside Spain, primarily Canada and the US.
The improvement in operating and financial figures was due to good traffic performance on all the toll roads, improved margins on the toll roads in Canada, the US and R-4, strong revenue growth at 407 ETR in Canada, the operation of Chicago Skyway during the full period and of the N4/N6 in Ireland, and a sizeable increase in the number of managed parking spaces.
EBIT increased by 23.4% to 163.8 million euro, while net profit was 17.8 million euro, compared with 51.3 million euro in 1H05, as a result of the higher financial expenses in 1H06 (1H05 was favoured by the reversal of a provision at Autopista del Maipo in Chile).
Revenues amounted to 389.3 million euro, i.e. 21% more than in 1H05.
Overseas revenues increased by 28.7% to 262.4 million euro and accounted for 67.4% of the total. Domestic revenues increased by 36.6% to 127 million euro.
At the end of June 2006, Cintra had 7.437 billion euro in net debt, 99.5% of which was project finance without recourse. The company has investment capacity to finance future growth using the net cash flow from the concessions, as well as the possibility of releveraging its projects and divesting more mature assets.
Every six months, Cintra performs an indicative internal valuation of its main assets; in June 2006, that valuation was 6.391 billion euro, 27.4% more than the company’s market capitalisation at 30 June (see attached valuation table).
The valuation includes only the thirteen assets that have been operational long enough and account for a sizeable proportion of the portfolio. The valuation was obtained by discounting cash flow to the shareholder at 30 June 2006. Another five concessions are included at book value for the moment, and they will be valued using discounted cash flow as soon as they have a sufficient track record. The valuation of Europistas (owned 27.096% by Cintra) is based on the price offered by an industrial group.
Toll roads: strengthened position in the US, and entering new markets
Cintra’s toll road area (23 concession), including the holding companies, increased revenues by 23.7% to 325.1 million euro, 83.5% of the company’s total revenues.
In 1H06, toll road EBITDA grew by 22.9% to 235.9 million euro and accounted for 91% of total EBITDA. Canadian toll road 407 ETR made a notable contribution to this result (46.5% of Cintra’s total), and its EBITDA increased by 27.9% due to strong revenue growth and containment of operating expenses (as a result of lower winter maintenance costs and billing expenses).
Growth is also due to the consolidation of Chicago Skyway for the full period and the entry into operation of the N4/N6 toll road in Ireland, which was opened to traffic in December 2005.
The EBITDA margin in the toll road business, including the results of the parent companies, was 72.6%, with a considerable improvement at 407 ETR, Chicago Skyway and Radial 4.
Traffic increased considerably on the main roads in the period:
- Canada – 407 ETR averaged 285,572 daily trips (+3.3%) and vehicle kilometres travelled (VKT) rose 3.2% to 1,006,326;
- USA – Chicago Skyway attained 48,460 vehicles per day (+9.5%);
- Spain – Ausol I registered an average of 19,121 vehicles per day (+3.6%), while Ausol II carried an average of 17,839 (+5.2%); Radial 4 increased traffic by 23.1% in the period to 7,485 vehicles/day, while traffic on Autema increased by 10.6% to a daily average of over 21,747 vehicles.
Highlights of the toll road division in the period:
- Strengthened position in the USA:
- Cintra began operating the Indiana Toll Road (253 km) under a 75-year concession. The concession represents a total investment of 3.8 billion USD and it is the second toll road in operation to be privatised in the United States;
- Agreement for the concession for sections 5 and 6 of State Highway 130 (SH130) in Texas for 1.3 billion euro (the concession will run 50 years from the end of construction). This is the first of the concessions that Cintra plans to develop in the Trans-Texas Corridor, in which Cintra is also a "strategic partner" of the State of Texas for the project’s 50-year duration.
- Additionally, the Spanish concession company has been operating the Chicago Skyway since January 2005, under a 99-year concession that cost 1.83 billion USD.
- Entrance into the Greek concession market after being selected as preferred contractor to design, build, finance and operate the Ionian Roads project. The 30-year concession represents an investment of approximately 1.160 billion euro.
- Acquisitions and divestments:
- Acquisition in April of an additional 10% of the R 4 toll road in Madrid (Cintra’s direct stake now stands at 55%);
- Sale in 1H06 of 5.39% of Europistas, producing a capital gain of 32.2 million euro. Cintra currently owns 27.096% of Europistas.
- Canada: 407 ETR implemented a toll increase in February; tolls for light vehicles increased by 8.7% at peak hours and 9.9% at off-peak hours; in April, 407 ETR reached a friendly agreement with the Province of Ontario to settle all their outstanding legal disputes. The settlement is due to both parties’ decision to create a stable collaboration framework that reinforces long-term relations and provides advantages to the highway’s users.
Car parks: the number of managed parking spaces grew by 13.3%, strengthening Cintra’s leading position
Cintra’s car park business registered 64.2 million euro in revenues in 1H06, 9.1% more than in 1H05, boosted by a significant increase in the number of managed parking spaces, particularly the entry into operation of the new T-4 terminal car parks at Madrid-Barajas airport and the Pamplona on-street concession. EBITDA in this segment increased by 13.9% to 23.3 million euro, and EBIT amounted to 14.7 million euro (+6.1%).
At the end of 1H06, Cintra managed 242,793 parking spaces, i.e. 13.3% more than in 1H05, reinforcing its position as Spain’s leading car park operator. The number of off-street parking spaces increased by 35.4% and now represents 27% of the total; on-street spaces increased by 6.7% to 150,617 (62% of the total); and private residents’ parking spaces totalled 26,795 (+8.2%), accounting for 11% of the total.
During the period, Cintra obtained contracts to manage the car park at San Javier airport (Murcia), as well as on-street spaces in the cities of Valencia, Calonge, La Junquera, L’Escala and Tossa de Mar (the latter four in Gerona). It also obtained an extension of the on-street parking management and tow-away contract in Castro Urdiales (Cantabria).