Financial Results for Six Months Ended 31 December 2003

26 February 2004

Macquarie Infrastructure Group (MIG) today announced its financial results for the six  months ended 31 December 2003.

For the period, across MIG’s major operational roads traffic was up 5.3%, revenue was up 14.1%, and EBITDA ¹was up 22.7%, on a weighted average basis.

However, as previously foreshadowed ², MIG’s financial results were negatively impacted by increases in real interest rates and the strengthening of the Australian dollar which have offset the solid operational performance of the MIG portfolio as a whole. 

The effect of these macro-economic impacts was to reduce asset valuations by a net $449 million.  This compares with the corresponding period to December 2002 where there was a net positive effect of $594million to valuations from changes in macro-economic factors.

For the six months to 31 December 2003, Total Changes in Equity was a decrease of $204million reflecting a decline in MIG Security Holders’ Interest from $6.1billion to $5.9billion.

The Net Asset Backing Per Security, before deferred tax balances and excluding outside equity interests, reduced from $3.74 at 30 June 2003 to $3.60 at 31 December 2003.

Chief Executive Officer of MIG, Mr Steve Allen said, “The half year has been a period of significant progress for MIG in terms of operations and projects, despite the considerable negative impact of macro-economic factors on MIG’s results.

“It is pleasing to see that across the portfolio traffic is up 5.3%, revenue is up 14.1% and EBITDA is up 22.7%, on a weighted average basis.

“In addition, in line with our objectives, MIG has completed or progressed construction on new projects worth $5.8 billion.  The projects are major initiatives in the communities they will serve and are: M6 Toll in UK, Warnow Tunnel in Germany, Westlink M7 in Sydney and SR125 South in San Diego.

  “Also during the period MIG sold its stake in Transurban (TCL) achieving an IRR of 25.4% over the life of its investment,” he said.

In December, MIG announced an agreement with Transurban to develop an electronic tolling solution for the Sydney toll roads, and, with Macquarie Bank as adviser, to bid jointly for Australian projects (excluding Mitcham-Frankston Freeway (MFF)).

Negative impacts on the results during the period, in addition to the macro-economic impact included: disappointing traffic on the Warnow Tunnel which resulted in MIG’s investment being revalued to zero; and a recent increase in corporate income tax in Ontario Canada, which reduced MIG’s valuation of its investment in 407ETR.

“MIG will remain focused on driving value from its existing portfolio of assets and it will continue to deliver on initiatives underway with a view to producing future growth and enhanced returns for security holders,” Mr Allen said.

Over the second half of the 2004 financial year, MIG will focus on:

• Resolving the dispute between 407ETR and the Ontario Government
• Building on the traffic and operational improvements on 407ETR achieved in 2003
• Ramp-up of M6 Toll
• Working to improve traffic flows at Warnow Tunnel
• Progressing development projects (Westlink M7, SR125 South)
• Continuing to consider whether MIG will participate in MFF bid
• Reviewing arrangements with Ferrovial re Cintra
• Continuing to develop MIG/TCL tolling joint venture
• Continuing to evaluate new opportunities.

Asset Update: 407ETR 

The 407ETR is in dispute with the Government of Ontario in relation to:

• The procedure for increasing tolls and toll levels
• The application of the statutory ‘plate denial’ process
• Determination of ‘base year’ for the contract penalty provisions.

MIG and 407ETR have strong legal advice on 407ETR’s contractual position and are confident of 407ETR’s position.

Tolls were increased by 7.7% from 1 February 2004, billings are being made at the increased level and the 407ETR business is continuing to operate normally.

Total vehicle kilometres travelled (VKT) was 2.5% higher in the six months to 31 December 2003 compared to the previous corresponding period.

Asset Update: M6 Toll

The M6 Toll opened on 14 December 2003, on budget and ahead of schedule. The road and the systems are operating well and awareness of the road and its benefits has increased significantly.  Around the opening period there were more than 500 million opportunities to see or hear about the M6 Toll.

The M6 Toll has comprehensive marketing initiatives underway which include: local and regional signage initiatives and direct engagement with road users, particularly hauliers.

Over the first three weeks of February the average daily traffic was 37,231.

Asset Update: Rostock

MIG reviewed initial traffic at Warnow Tunnel which led to a decision to revalue the asset to zero in the December 2003 accounts.

MIG is working with traffic consultants and the City of Rostock on a number of initiatives aimed at increasing awareness and usage of the tunnel.

Forecast Distributions
As per the directors’ forecast, a distribution of 3.75c per security plus imputation credits was paid for the half year and directors’ expect payment of a 3.75c distribution per security plus imputation credits for each of the following three half year periods to June 2005.

Performance in Brief

The Interim Financial Report and Appendix 4D are attached.

Half Year Revenue & EBITDA Increase

The following table shows increases over the half year in Revenue and EBITDA for MIG's significant operational toll roads.

¹ For the 12 month period to 30 June 2003 compared to previous corresponding period
# Calculated for A1 only (A8 excluded due to reversion on 6 June 2003)

Asset

The following table profiles MIG's asset valuations at 31 December 2003.

# Includes impact of Ontario Provincial tax change of ($146m)

¹ Earnings before interest, tax, depreciation and amortisation

²See MIG 2003 Annual Report (Note 15)

For further information, please contact:

Stephen Allen
Chief Executive Officer
Macquarie Infrastructure Group
Tel: 61 2 8232 4025
Email: stephen.allen@macquarie.com

Media Enquiries
Jane Rotsey
Public Affairs Manager
Mobile: (61) 401 997 160
Email: jane.rotsey@macquarie.com